U.S. Treasury Secretary Bessent: Temporarily Reducing Tariffs on China from 34% to 10%, with Potential Reinstatement After 90 Days if No Agreement is Reached

U.S. Treasury Secretary Scott Bessent Discusses 90-Day Tariff Suspension Agreement with China

U.S. Treasury Secretary Scott Bessent stated in an interview this morning on May 13 that the Trump administration has reached an agreement with a Chinese delegation in Geneva, Switzerland, to suspend new tariffs for 90 days and initiate subsequent structural negotiations. Bessent emphasized, “This is not a concession; it is to ensure adjustments and pressure.” He revealed more about the economic pressures on China, fentanyl controls, and measures to prevent Chinese transshipment goods from entering the U.S.

Agreement on 90-Day Tariff Suspension Between U.S. and China; Further Increases Possible if No Consensus Reached

Bessent first stated:

• The U.S. and China have agreed to suspend new tariffs for the next 90 days.
• The two parties have established a “Geneva mechanism” for regular consultations to address structural issues, including non-tariff barriers and strategic industry protections.
• Currently, the tariff on China has been reduced from 34% to 10%, but he stressed that this is only a suspension, not a cancellation; if no consensus is reached in 90 days, tariffs may increase again.

Focusing on Non-Tariff Barriers: The U.S. Presents a List, and China Must Make Specific Changes

Regarding China’s long-standing use of non-tariff barriers such as:

• Subsidies
• Quotas
• Administrative reviews

to marginalize U.S. companies, Bessent noted that the U.S. Trade Representative has compiled a list of barriers that China has employed for decades. The primary goal of this 90-day tariff negotiation agreement is to open the Chinese market and remove unfair restrictions, allowing U.S. companies fair access to China.

The World Sees China’s Pressure: Factory Closures, Declining Orders, and Social Instability

When asked whether China has shown a sense of urgency, Bessent responded that although the Chinese negotiating representatives appeared calm, the U.S. clearly sees a decline in Chinese exports, a drop in manufacturing PMI, and even signs of social unrest.

He stated, “The Chinese Vice Premier is an experienced negotiator, but we can tell that their economy is indeed under pressure.”

Preventing Chinese Goods from Circumventing Tariffs via Mexico; U.S.-Mexico Trade Negotiations Ongoing

When asked if China might circumvent tariffs by exporting goods to Mexico first to avoid taxes, Bessent admitted:

“This is already happening, especially with automobiles and electronics.” The U.S. has begun simultaneous negotiations with Mexico to close such loopholes. He added that if China’s “dual circulation” policy seeks only to dump excess capacity worldwide, it will disrupt the global supply-demand balance.

Substantial Progress in U.S.-China Fentanyl Cooperation

Bessent specifically pointed out that another significant breakthrough from the Geneva meeting was the fentanyl drug issue. He stated:

“China not only sent a trade delegation but also sent the Deputy Minister of Public Security responsible for drug regulation; the U.S. also sent a National Security Advisor.” The two sides engaged in in-depth technical discussions on controlling raw materials at the source, laying the groundwork for specific cooperation in the next 90 days.

De-risking Rather than Full Decoupling; U.S. Seeks Supply Chain Independence

When asked whether the tariff reduction would undermine efforts to bring manufacturing back to the U.S., Bessent stated that it would not, emphasizing:

• This is merely a buffer adjustment to the short-term “counteraction heat.”
• High tariffs and investment incentives for strategic industries like steel, pharmaceuticals, and semiconductors will continue.

He remarked, “The U.S. does not want to fully decouple from China, but we also cannot repeat the supply chain crisis during COVID with shortages and delays.”

Will Tariffs Dropping Instead of Rising Cool Down the U.S. Economy? Treasury Secretary: Not Worried, Current Data is Strong

Bessent emphasized that the current 20% base tariff is still in place, and the new fentanyl tax added in February is also still active, and the market has adapted. He anticipates that the economy will not only avoid recession but will also stabilize due to reduced uncertainty:

“Current economic data in the U.S. is stronger than expected; now that it has dropped back to 10%, it helps businesses with budget planning.”

Finally, Bessent revealed that a new round of Geneva negotiations will begin in the coming weeks, focusing on addressing non-tariff barriers and manufacturing policies, striving to reach a more comprehensive and enforceable long-term agreement.

(China Implements Large-Scale Easing Measures to Attempt to Stem Economic Damage from Trade War)

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