U.S. and China Ease Tariffs as Trade Talks Resume, Boosting Market Confidence

U.S. Treasury Secretary Scott Bessent said he expects to meet with Chinese officials in the coming weeks, though no exact date has been set. In an interview with CNBC, Bessent emphasized that the U.S. is not pursuing full economic decoupling from China but aims to protect key domestic sectors like steel and aluminum.

The remarks follow a rare joint statement in which the U.S. and China agreed to a 90-day pause on escalating tariffs and announced mutual reductions. Washington will reduce former President Trump’s "reciprocal" tariffs on Chinese goods to 10%, although a 20% tariff remains in place over China’s alleged involvement in the fentanyl trade. Bessent noted that China appears committed to addressing this issue.

China also agreed to lower its duties on U.S. imports to 10%, signaling a potential de-escalation in the prolonged trade conflict. Both sides have confirmed that further high-level negotiations and working-level consultations are planned in the near future to resolve broader economic and trade concerns.

Markets reacted positively to the news. U.S. stock futures rallied, building on earlier gains, while the U.S. dollar strengthened against major currencies. The Chinese yuan also rose, reflecting renewed investor optimism.

Previously, tariffs had surged to as high as 145% on Chinese goods, with Beijing retaliating with levies of up to 125% on American imports. Bessent described the extreme measures as nearing a “trade embargo.” While the latest agreement eases tensions, analysts point out that tariffs remain significantly higher than levels seen at the start of Trump’s second term. Universal 10% tariffs and specific levies on steel, aluminum, and autos are still in place, highlighting the ongoing complexity of U.S.-China trade relations.