US-China rate deal: What does it mean?

The US and China have agreed to reduce the ceasefire to reduce the import load on goods traded between the two countries.

The agreement marks an important dissolution of the trade war between the two largest economies in the world, which has sent shock waves that influence countless other countries, including the UK.

This is what it all means.

Both the US and China have confirmed a reduction in rates They imposed each other after the first escalation by President Donald Trump earlier this year.

The deal includes both countries that cancel some rates completely and 90 days, by May 14.

The result is that the American rates for Chinese import fall to 145% to 30%, while Chinese rates on some American import will fall from 125% to 10%.

China also stopped and demolished Non-Tariff countermeasuresSuch as the export of critical minerals to the US, who set up it in response to the first escalation.

The American measures still include an extra component of 20% aimed at exerting pressure on Beijing to do more to curb the illegal trade in fentanyl, a powerful opioid medicine.

The announcement came after the two countries had had conversations in Switzerland, the first between the two countries since Trump gave rise to the last rate war.

To say the least it is difficult to predict the next steps in this current trade war between the US and China.

But this is an important agreement between the two powerhouse economies in the world and has been welcomed in general.

Even if the suspended rates are recovered after 90 days, because the vast majority of rates announced after the Liberation Day were canceled, the American rates on China would only rise to 54% and the Chinese rates on the US would rise to 34%.

However, the conversations between the two governments will continue, so a further deal can be closed.

The American Minister of Finance Scott Bessent said that the consensus from both countries was that “neither of them wants a decoupling”, while the Chinese Ministry of Trade said that the agreement was a step to “lay the foundation to bridge differences and to deepen cooperation”.

So the relationships between the US and China sound more friendly, but as we have seen so far during this Trump presidency, things can change quickly.

In one word – a lot.

In 2024, the largest category of goods exported from the US to China Soybeans were mainly used to feed China’s estimated 440 million pigs. The US also sent medicines and petroleum.

In the meantime, China exported large amounts of electronics, computers and toys.

The largest category of American import from China is smartphones, good for 9% of the total. A large part of these smartphones Apple iPhones made in China.

However, the US buys much more from China ($ 440 billion) than it sells ($ 145 billion), which Trump is long not satisfied.

His reasoning partly for the introduction of rates, and higher countries that sell more to the US than they buy, is to encourage American consumers to buy more American goods, to increase the amount of increased load and to stimulate production paths.

The escalating trade war in recent months has led to a collapse of the amount of goods sent over the Pacific, but investors believe that the truce will lead to a rebound, with shares for some of the world’s largest shipping companies.

Politicians have started on both sides and will undoubtedly continue to claim the victory over this ceasefire.

Despite the US and China who call this a joint agreement, people in Beijing will interpret it as the Trump government that decreases the rates, according to Janka Oertel, director of the ASIA program of the European Council for Foreign Relations.

“We are back to AF, now can start negotiating. The outcome is uncertain, but China is now in a psychologically stronger position than before,” she said.

The US will still be substantial with 30%for Chinese import for Chinese import, although lower.

“This trade agreement is a victory for the United States, from which President Trump’s unparalleled expertise demonstrates when securing deals that improve the American people,” said a statement of the White House.

Economists at Deutsche Bank have proposed the reduction of rates, and Last week’s UK-US Deal for themmeans that there is “a likely cap and floor” for Trump’s rates.

“The UK has one of the least unbalanced relationships with the US and now has a universal rate percentage of 10%. China has one of the most unbalanced relationships and now has a rate percentage of 30%,” said George Saravelos, head of FX Research at the Investment Bank.

“It is reasonable that these two songs now set the limits of where American rates will end this year.”