US and China cut mutual tariffs by 115%
The agreement was reached during the negotiations on May 10 and 11 in Geneva, and the market reacted positively to it. According to Alexey Maslov, Director of the Institute of Asian and African Countries at Moscow State University, this agreement is beneficial to both countries, but it is still primarily a victory for China
The US is cutting tariffs on Chinese goods from 145% to 30%, while China is cutting tariffs on American goods from 125% to 10%. Both countries are thus cutting them by 115%.
The joint statement also stated that "the parties will establish a mechanism to continue discussions on economic and trade relations." The trade war de-escalated during talks on May 10 and 11 in Geneva. The delegations were led by US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng.
According to the Chinese side, an "important consensus" was reached, since "the essence of economic and trade relations between the two countries is mutual benefit and win-win results."
Bessent said that "the US and China have made significant progress in very important trade talks." The market has responded positively: oil prices have accelerated their rise, the dollar is strengthening, US Treasury yields are rising, and gold is falling.
However, China also receives long-term benefits, says Alexey Maslov, director of the Institute of Asian and African Countries at Moscow State University:
— It turned out that countries are not so afraid of Trump's measures and are putting forward their own counter demands, as, for example, China did. And it turned out that these demands, increased tariffs, including from China, are hitting the American economy quite painfully even at a time when these tariff barriers have not even been fully deployed. For example, it is already known that oilseeds and grain crops are undersupplied to the United States from China, which is hitting the pockets of American farmers quite hard, especially in the southern United States. Therefore, this is not as simple a story as it seemed. At the same time, for example, American public opinion polls show that the tariffs themselves, the tariff war and the separation of the United States and China, in the opinion of Americans, are more damaging to the image of the United States than to China. And China in this case is acting as the defender, the offended, and the offended are loved more than the attackers. Therefore, here we must understand that this is only a question of the beginning of the negotiation process. It is absolutely correct that for now we are talking about only a 90-day freeze on these tariffs. And here is another important point - that a whole series of sanctions on American companies that were on the Chinese sanctions lists will be lifted, and export controls on some of the most important minerals that the US buys from China will be reduced.
— Still, this agreement, even if it’s for three months, is whose victory?
— Rather China, of course, because it was the US that tried to get China to stop deliveries through third countries. For China, this is more important now, the abolition of tariffs, because for it, the export orientation of trade is key.
— Now the whole world is following the news that came from Switzerland, where these negotiations took place, there will probably be a line of people wanting to do the same as for China. Am I right?
— And I think that this is how it will be. Moreover, according to various leaks that are coming from China, China is raising the issue of reducing tariff duties for a number of Southeast Asian countries, primarily its partners. In this way, China will look like the savior of the situation. Therefore, I think that at least the countries of Southeast Asia, in this case Vietnam, Malaysia, Indonesia, Laos, which have suffered seriously from tariffs, will make the same request. And I do not rule out that, given that they suffered because of China's support, the US will agree to such a deal.
— Three months will pass quite quickly. Based on their results, do you think these rates will remain or a rollback is possible?
— I think there will be diversification. That is, for some items the tariff will be reduced, for example, for agricultural products, for electronics. Tariffs will certainly be reduced for a number of components used for machine tools and equipment, and for some they will remain the same. That is, most likely, we will see a diversified tariff scale.
Markets welcomed the latest reports of progress between the US and China, Bloomberg notes, adding that “history shows that reaching a detailed agreement can take a long time, if it is possible at all.” CNN calls the mutual tariff reduction a major trade breakthrough in the two countries’ relations.
A month ago, Trump cancelled his own tariffs on the import of computers and smartphones. According to media reports, the probable reason was the need to protect American businesses that rely on Asia to manufacture their products. This primarily concerns Apple: the corporation produces about 90% of its iPhones in China.
However, media sources note that Apple will continue to move some of its production, but not to the US, but to India. American port leaders had previously called on the Senate to cancel the tariffs: according to estimates by the management of the Long Beach Port near Los Angeles, the drop in activity would have affected nearly 3 million workers at American ports.
bfm.ru
