HOT: US - China reduce reciprocal tax by 115%

US Treasury Secretary Scott Bessent (left) and US Trade Representative Jamieson Greer speak to the press after trade talks with China in Geneva, Switzerland, May 11 - Photo: REUTERS

According to the New York Times, on May 12, representatives of the US and Chinese trade negotiation delegations in Geneva (Switzerland) said that the two countries have reached a temporary agreement to reduce reciprocal tariffs imposed by both sides on each other, showing a significant effort to cool down trade tensions between the world's two largest economies.

Suspend tariffs for 90 days

In a joint statement, Beijing and Washington said they would suspend tariffs for 90 days to allow for negotiations.

Under the deal, the US will reduce import tariffs on Chinese goods from the current 145% to 30%, while China will lower tariffs on US goods from 125% to 10%.

"We came to the conclusion that we have many common interests. The common view of both delegations is that neither side wants a separation," US Treasury Secretary Scott Bessent said at a press conference.

China also made a clear commitment: "China will take all necessary administrative measures to suspend or remove the non-tariff measures that have been applied to the US since April 2."

"We have concluded negotiations with a very good outcome for both sides," said US Trade Representative Jamieson Greer, adding: "We are on a positive path to dialogue with China."

The deal broke a stalemate that had nearly paralyzed trade between the US and China. Many US companies had previously put orders on hold, hoping the two countries would reach a deal to lower tariffs.

While the Trump administration announced on May 11 that it had reached a “deal” with China after trade talks, specific details will not be released until May 12. Chinese officials also said that the weekend meetings had made significant progress.

Content of US-China joint statement

The US-China joint statement on the economic and trade meeting in Geneva affirmed that the two countries have reached an agreement and will carry out the following contents from May 14:

"The US side will:

(i) adjust the application of the ad valorem additional tariff rate on goods originating in China (including goods from the Hong Kong Special Administrative Region and the Macau Special Administrative Region), provided for in Executive Order No. 14257 issued on April 2, 2025, by temporarily suspending 24 percentage points of that tariff rate for an initial period of 90 days.

At the same time, the remaining tax rate of 10% on the above-mentioned items is still maintained according to the terms of the above-mentioned decree.

(ii) eliminate the adjusted additional duties imposed on these items pursuant to Executive Order No. 14259 dated April 8, 2025, and Executive Order No. 14266 dated April 9, 2025."

The ad valorem additional tariff rate is the administrative term for the reciprocal taxes that the US and China impose on each other.

Thus, the administration of President Donald Trump has agreed to remove all additional tariffs on Chinese goods issued after April 2.

With the 34% reciprocal tax rate announced by Mr. Trump on April 2, in the next 90 days, the US will only impose 10% and temporarily suspend 24%. After 90 days, if there is no further agreement, the 34% reciprocal tax rate will be restored.

It is not yet clear whether the two sides have reached an agreement regarding the 20% tariff that the US imposed on Chinese goods before April 2. If it is not lifted, the total actual tariff that the US temporarily imposed on China from May 14 to the next 90 days will be 30%.

The joint statement also clearly stated the contents that the Chinese side will implement, including:

"(i) Correspondingly adjust the application of additional ad valorem tariffs on goods originating in the United States, as provided for in Notice No. 4 of 2025 of the Customs Tariff Commission of the State Council (Government of China), by temporarily suspending 24 percentage points of such tariffs for an initial period of 90 days.

At the same time, retain the remaining additional tariff of 10% on these items.

Eliminate the additional tariffs adjusted under Notice No. 5 and Notice No. 6 of 2025 of the Customs Tariff Commission of the State Council.

(ii) Take all necessary administrative measures to suspend or repeal non-tariff retaliatory measures imposed on the United States as of April 2, 2025.

Thus, the biggest result of the negotiation is that the US and China will reduce their respective tariffs to 10% within the next 90 days.

The joint statement also said that after implementing the above measures, the two sides will establish a mechanism to continue discussing economic and trade relations.

Chinese Vice Premier He Lifeng, Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will represent the two countries in the mechanism.

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Source: https://tuoitre.vn/nong-my-trung-giam-thue-doi-ung-lan-nhau-115-20250512141445673.htm