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Tariffs

US and China Agree to Ceasefire in Ongoing Trade War

Strategic Insights

— 2 min read

The first high-level meeting between the US and China since Donald Trump's inauguration resulted in a ceasefire in the ongoing trade war, with US Treasury secretary Scott Bessent and China's vice-premier He Lifeng agreeing to slash respective tariffs by 115 percentage points for 90 days. The meeting, held in the basement of the IMF headquarters, was the first step towards de-escalating the tensions between the two countries. The ceasefire has brought relief to markets and has provided a temporary respite to the bilateral relationship.

Key Takeaways:

  • The US and China have agreed to a ceasefire in the ongoing trade war, with a 90-day reduction in tariffs by 115 percentage points.
  • The US Treasury secretary, Scott Bessent, met with China's vice-premier, He Lifeng, in the first high-level meeting between the two countries since Donald Trump's inauguration.
  • The meeting was held in the basement of the IMF headquarters, and was previously unreported.
  • The US had warned that the high level of tariffs was not sustainable and was effectively an embargo on US-China trade.
  • Despite the ceasefire, experts warn that the bilateral relationship remains troubled, with Trump's unpredictable policymaking expected to drive China to continue to diversify its exports markets.
  • The Chinese exporters are expected to frontload more exports to the US during the 90-day window, which could lead to another surge in China's trade surplus with the country.
  • The US still retains much higher tariffs on China than on any other country, with total US tariffs on Chinese goods remaining at about 40 per cent after the ceasefire.
  • The Chinese tariffs on the US would be about 25 per cent after the ceasefire.
  • The US-China trade negotiations are expected to be like a "rollercoaster," with markets able to breathe a temporary sigh of relief but with no full resolution in sight.

Statistics:

  • US tariffs on China before the ceasefire: 150% (February 1), 100% (March 4), 50% (April 2), and 34% (April 8).
  • Chinese tariffs on the US before the ceasefire: 150% (February 1), 100% (March 4), 50% (April 2), and 34% (April 8).
  • US tariffs on China after the ceasefire: 34% (April 11).
  • Chinese tariffs on the US after the ceasefire: 10% (April 11).
  • Timeframe of the ceasefire: 90 days.
  • Total US tariffs on Chinese goods after the ceasefire: about 40%.
  • Chinese tariffs on the US after the ceasefire: about 25%.

Sources:

  • The Financial Times
  • White House
  • IMF (International Monetary Fund)
  • FT research

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