China and the United States have agreed to slash their tariffs on each other by 115 percent. China and US will cut their tariffs for a period of 90 days, during which they are expected to engage in trade negotiations. This agreement follows a weekend negotiation marathon.
Under the new tariffs, the US tariffs on China shall stand at 30 percent while the tariffs on US by China will be at 10 percent. Previously, US tariffs on Chinese goods stood at 145 percent while tariffs on American goods going into China stood at 125 percent, giving the two nations a difference of 20 percent.
By May 14, the US will temporarily lower its tariffs on Chinese goods from 145 percent to 30 percent, while China will cut its levies on American imports from 125 percent to 10 percent, a joint statement by China and US stated.
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The news on the cutting of tariffs was greeted by a positive market reaction as various key indicators across the world recorded immediate gains.
According to the CNN, Hong Kong’s Hang Seng index was up 3.4 percent by late afternoon local time, while in Europe, Germany’s DAX index and France’s CAC were 1.2 percent and 1 percent up respectively early in the trading session. London’s FTSE index gained by 0.3 percent.
In the United States, the US futures went up, while futures in the S&P 500 and tech-heavy Nasdaq were trading 2.7 percent and 3.6 percent higher respectively. The Dow was expected to open 2.1 percent higher, while the US dollar had already gained 1.3 percent early Monday morning.
China and US have been locked in a trade war that started in early April after US President Donald Trump slapped countries across the world with what he termed as retaliatory tariffs.
Although the tariffs are aimed at impacting the targeted countries, the CNN reported that Americans stood to pay more. “Americans and people across the world are set to pay a steep price. Importers, not the countries Trump targeted, will pay the tariffs, and those costs often get passed onto wholesalers, retailers and ultimately consumers. But businesses abroad won’t be off the hook either, with Americans likely to source goods from countries with lower tariff rates,” the CNN reported.
