Mon, 12 May 2025

Mon, 12 May 2025 Faisal Islam: US and China step back from beyond brink

It is not an end to the trade war, but it is a significant truce, writes the BBC's economics editor.
A temporary ceasefire has been reached in the main front of the global trade war, with markets rising and container ships resuming their journeys across the Pacific. The breakthrough came from US-China talks in Switzerland, where both sides agreed to significantly lower tariffs for at least three months. The previous retaliatory tariff rates have been cancelled, and the reciprocal tariff rate of 34% has been lowered to 10%. The new tariff levels are: 30% from the US (including a 20% component aimed at curbing fentanyl trade) and 10% from China. This development has brought the world's two largest economies back from the brink, with both sides agreeing to step back from further escalation. However, experts warn that this is not an end to the trade war, but rather a significant truce that will allow trade to flow for now. Prices may rise slightly due to tariffs, and some uncertainty remains given the temporary nature of the agreement.
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