The U.S.-China tariff reductions will provide near-term economic relief for both countries, even as significant long-term decoupling remains likely, and they will embolden China to retaliate strongly in future spats and to withhold major consumer stimulus at home. U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer announced on May 12 that they had reached a deal with Chinese Vice Premier He Lifeng during May 10-11 meetings in Geneva, Switzerland, to temporarily cut tariffs for 90 days during further negotiations. These cuts, effective May 14, will reduce U.S. tariffs introduced in April on Chinese imports from 125% to 10%. However, the 20% U.S. tariffs on China ostensibly over its role in the fentanyl trade, various U.S. sectoral tariffs (e.g., on automobiles, steel and aluminum), and the roughly 25% U.S. tariffs on China imposed before U.S. President Donald Trump took office will remain in place. The May 12 deal...
