US, China take step back from sky-high tariffs, agree to pause for 90 days for more talks
Geneva, May 12 (AP): US and Chinese officials said Monday they had reached a deal to roll back most of their recent tariffs and call a 90-day truce in their trade war for more talks on resolving their trade disputes.
Stock markets rose sharply as the globe's two major economic powers took a step back from a clash that has unsettled the global economy.
US Trade Representative Jamieson Greer said the US agreed to drop its 145 per cent tariff rate on Chinese goods by 115 percentage points to 30 per cent, while China agreed to lower its rate on US goods by the same amount to 10 per cent.
Greer and Treasury Secretary Scott Bessent announced the tariff reductions at a news conference in Geneva.
The two officials struck a positive tone as they said the two sides had set up consultations to continue discussing their trade issues. Bessent said at the news briefing after two days of talks that the high tariff levels would have amounted to a complete blockage of each side's goods, an outcome neither side wants.
“The consensus from both delegations this weekend is neither side wants a decoupling,” Bessent said. “And what had occurred with these very high tariff ... was an embargo, the equivalent of an embargo. And neither side wants that. We do want trade."
“We want more balanced trade,” he said. "And I think that both sides are committed to achieving that."
The delegations, escorted around town and guarded by scores of Swiss police, met for at least a dozen hours on both days of the weekend at a sunbaked 17th-century villa that serves as the official residence of the Swiss ambassador to the United Nations in Geneva.
At times, the delegation leaders broke away from their staffs and settled into sofas on the villa's patios overlooking Lake Geneva, helping deepen personal ties in the effort to reach a much-sought deal.
China's Commerce Ministry said the two sides agreed to cancel 91 per cent in tariffs on each other's goods and suspend another 24 per cent in tariffs for 90 days, bringing the total reduction to 115 percentage points.
The ministry called the agreement an important step for the resolution of the two countries' differences and said it lays the foundation for further cooperation.
“This initiative aligns with the expectations of producers and consumers in both countries and serves the interests of both nations as well as the common interests of the world,” a ministry statement said.
China hopes the US will stop “the erroneous practice of unilateral tariff hikes” and work with China to safeguard the development of their economic and trade relations, injecting more certainty and stability into the global economy, the ministry said.
The joint statement issued by the two countries said China also agreed to suspend or remove other measures it has taken since April 2 in response to the US tariffs.
China has increased export controls on rare earths including some critical to the defence industry and added more American companies to its export control and unreliable entity lists, restricting their business with and in China.
The full impact on the complicated tariffs and other trade penalties enacted by Washington and Beijing remains unclear. And much depends on whether they will find ways to bridge longstanding differences during the 90-day suspension. Bessent said in an interview with CNBC that US and Chinese officials will meet again in a few weeks.
But investors rejoiced as trade envoys from the world's two biggest economies blinked, finding ways to pull back from potentially massive disruptions to world trade and their own markets.
Futures for the S&P 500 jumped 2.6 per cent and for the Dow Jones Industrial Average was up 2 per cent. Oil prices surged more than USD 1.60 a barrel and the US dollar gained against the euro and the Japanese yen.
“This is a substantial de-escalation,” said Mark Williams, chief Asia economist at Capital Economics. But he warned “there is no guarantee that the 90-day truce will give way to a lasting ceasefire.”
Jens Eskelund, president of the European Union Chamber of Commerce in China, welcomed the news but expressed caution. The tariffs only were suspended for 90 days and there is great uncertainty over what lies ahead, he said in a statement.
“Businesses need predictability to maintain normal operations and make investment decisions. The chamber therefore hopes to see both sides continue to engage in dialogue to resolve differences, and avoid taking measures that will disrupt global trade and result in collateral damage for those caught in the cross-fire," Eskelund said.
Trump last month raised US tariffs on China to a combined 145 per cent, and China retaliated by hitting American imports with a 125 per cent levy. Tariffs that high essentially amount to the two countries boycotting each other's products, disrupting trade that last year topped USD 660 billion.
The announcement by the US and China sent shares surging, with US futures jumping more than 2 per cent. Hong Kong's Hang Seng index surged nearly 3 per cent and benchmarks in Germany and France were both up 0.7 per cent.
The Trump administration has imposed tariffs on countries worldwide, but its fight with China has been the most intense. Trump's import taxes on goods from China include a 20 per cent charge meant to pressure Beijing into doing more to stop the flow of the synthetic opioid fentanyl into the United States.
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Supreme Court strikes down Trump's sweeping tariffs, upending central plank of economic agenda
Washington (AP): The Supreme Court struck down President Donald Trump's far-reaching global tariffs on Friday, handing him a significant loss on an issue crucial to his economic agenda.
The 6-3 decision centres on tariffs imposed under an emergency powers law, including the sweeping “reciprocal” tariffs he levied on nearly every other country.
It's the first major piece of Trump's broad agenda to come squarely before the nation's highest court, which he helped shape with the appointments of three conservative jurists in his first term.
The majority found that the Constitution “very clearly” gives Congress the power to impose taxes, which include tariffs. “The Framers did not vest any part of the taxing power in the Executive Branch,” Chief Justice John Roberts wrote.
Justices Samuel Alito, Clarence Thomas and Brett Kavanaugh dissented.
“The tariffs at issue here may or may not be wise policy. But as a matter of text, history, and precedent, they are clearly lawful,” Kavanaugh wrote in the dissent.
The majority did not address whether companies could get refunded for the billions they have collectively paid in tariffs. Many companies, including the big-box warehouse chain Costco, have already lined up for refunds in court, and Kavanaugh noted the process could be complicated.
“The Court says nothing today about whether, and if so how, the Government should go about returning the billions of dollars that it has collected from importers. But that process is likely to be a mess,' as was acknowledged at oral argument,” he wrote.
The tariffs decision doesn't stop Trump from imposing duties under other laws. While those have more limitations on the speed and severity of Trump's actions, top administration officials have said they expect to keep the tariff framework in place under other authorities.
The Supreme Court ruling comes despite a series of short-term wins on the court's emergency docket that have allowed Trump to push ahead with extraordinary flexes of executive power on issues ranging from high-profile firings to major federal funding cuts.
The Republican president has been vocal about the case, calling it one of the most important in US history and saying a ruling against him would be an economic body blow to the country. But legal opposition crossed the political spectrum, including libertarian and pro-business groups that are typically aligned with the GOP. Polling has found tariffs aren't broadly popular with the public, amid wider voter concern about affordability.
The Constitution gives Congress the power to levy tariffs. But the Trump administration argued that a 1977 law allowing the president to regulate importation during emergencies also allows him to set tariffs. Other presidents have used the law dozens of times, often to impose sanctions, but Trump was the first president to invoke it for import taxes.
Trump set what he called "reciprocal" tariffs on most countries in April 2025 to address trade deficits that he declared a national emergency. Those came after he imposed duties on Canada, China and Mexico, ostensibly to address a drug trafficking emergency.
A series of lawsuits followed, including a case from a dozen largely Democratic-leaning states and others from small businesses selling everything from plumbing supplies to educational toys to women's cycling apparel.
The challengers argued the emergency powers law doesn't even mention tariffs and Trump's use of it fails several legal tests, including one that doomed then-President Joe Biden's USD 500 billion student loan forgiveness program.
The economic impact of Trump's tariffs has been estimated at some USD 3 trillion over the next decade, according to the Congressional Budget Office. The Treasury has collected more than USD 133 billion from the import taxes the president has imposed under the emergency powers law, federal data from December shows.
