China, U.S. Cancel 91% Tariffs, Boosting Global Markets

On May 12, following the release of the joint statement from the Geneva economic and trade talks between China and the United States, international opinion widely welcomed the development. According to the statement, the U.S. has canceled 91% of the additional tariffs imposed, and China has correspondingly canceled 91% of its retaliatory tariffs. The U.S. has also suspended the implementation of 24% "reciprocal tariffs," with China doing the same. This progress has led to a rise in major global stock markets. The Director-General of the World Trade Organization, Ngozi Okonjo-Iweala, commented that the progress in the China-U.S. economic and trade talks is crucial not only for the two countries but also for the rest of the world, aligning with the expectations of all parties.

This round of talks was held at the request of the U.S. and marked the first face-to-face meeting between the two sides since April, when the U.S. imposed high tariffs on China, prompting retaliatory measures from China. Over two days, both sides engaged in candid, in-depth, and constructive communication, reaching several positive agreements and significantly reducing bilateral tariffs. They also agreed to establish a mechanism for economic and trade consultations to maintain communication on their respective concerns. These three key outcomes—consensus, measures, and mechanisms—demonstrate the substantial progress made during the talks.

Professor Li Haidong from the Institute of International Relations and Professor Wang Xiaosong from Renmin University of China both noted that the partial achievements of this round of talks are hard-won. This reflects the objective recognition by both sides of the interdependence of the Chinese and U.S. economies, which cannot be severed. It also lays the groundwork for further coordination and cooperation on broader issues. The outcomes of the talks have provided a foundation and created conditions for both sides to further narrow their differences and deepen cooperation.

Since April, the U.S. government has imposed additional "reciprocal tariffs" on China, escalating tariff measures and ultimately raising the tax rate to 125%. China responded with firm and justified countermeasures, raising its tariffs on the U.S. to 125%. During this process, the "boomerang effect" of the U.S.'s high tariffs became increasingly apparent, putting pressure on the U.S. government. Recently, criticism of Washington's tariff policies has grown louder within the U.S.

In the first quarter of this year, the U.S. GDP contracted by 0.3% on an annualized basis, the worst performance since 2022. Many in the U.S. economic community have warned that if tariff policies are not changed, the likelihood of an economic recession in the U.S. exceeds 60%, and the inflation rate could rise to between 3.5% and 4%. On May 2, the U.S. government officially ended its tax-exempt policy for small packages from China, causing prices for some U.S. products to more than double. Additionally, export volumes at most U.S. ports have shown significant declines. The service sector, which accounts for over 70% of the U.S. economy, has also been affected: according to data from s&p global, the growth rate of business activity in the U.S. service sector slowed to its lowest level in a year and a half in April. The approval rating for the current U.S. administration after its first 100 days in office has hit a record low for the same period in the past 80 years. This serves as a warning from the market and the public to the U.S. government.

In contrast, China's economic strength, resilience, and policies of continuous opening have bolstered China's strategic resolve and ability to withstand risks and challenges. In the first quarter of this year, China's economy grew by 5.4% year-on-year, ranking among the top performers among major global economies. Despite U.S. tariff policies, China's exports in April maintained nearly double-digit growth, indicating that recent policy measures have had a positive impact. At the recently concluded Canton Fair, the number of overseas buyers and on-site export intentions reached new highs. A survey by the European Union Chamber of Commerce in China found that more than two-thirds of its members reported that U.S. tariffs have not affected their imports from China. Several international investment institutions predict that China's economy will maintain steady growth this year.

Actions speak louder than words. The outcomes of the Geneva economic and trade talks between China and the U.S. are commendable, and further progress requires continued efforts from both sides, especially from the U.S. as the initiator of the trade war. The U.S. must show sincerity and take concrete actions to avoid backtracking and continue to work with China. Some international media have pointed out that the biggest obstacle to the China-U.S. economic and trade talks is the uncertainty of U.S. policies. If the U.S. insists on harming China's interests, China will firmly retaliate and stand its ground. Regardless of international developments, China will remain steadfast in doing its own work, upholding justice, fairness, and the right path.

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