U.S. Lowers Tariffs on Chinese Imports To 30%, Sending Stocks Soaring

The U.S. has agreed to temporarily lower the import tariffs imposed on China to 30% for the next 90 days, a development that has sent the stock market soaring. At the same time, China has said that it will lower its import duty on American goods to 10% from 125%.The new tariffs will remain in effect for 90 days while the two sides continue negotiations aimed at resolving their trade differences, said U.S. and Chinese officials.The tariffs the U.S. had imposed on Chinese imports come down from 145%, a level that had effectively ground trade between the world’s two largest economies to a halt. China had retaliated against the U.S. with tariffs of as high as 125% on American imports, while also targeting American made films and some services as well. News of the reduced tariffs and ongoing negotiations have sent U.S. stocks surging higher. The blue-chip Dow Jones Industrial Average is up 1,000 points in premarket trading on May 12, while the benchmark S&P 500 index has gained 3%.The technology-laden Nasdaq Composite Index is up nearly 800 points or 4% as the share prices of microchip companies and the mega-cap Magnificent Seven rise sharply. However, import duties of 30% on Chinese goods are still extremely high and likely to impact the U.S. economy given the amount and breadth of products America buys from China. Economists continue to characterize tariffs as a tax on consumers and see the current tariff regime as slowing growth in the U.S. economy. China’s government has also reportedly agreed to suspend countermeasures adopted in retaliation for escalating U.S. tariffs. The Chinese government had ordered restrictions on the export of rare earth metals and magnets, critical components used by many industries, including automakers and chipmakers.In announcing the lowered tariffs, U.S. Treasury Secretary Scott Bessent, who participated in the negotiations, said the tariffs had created an embargo between the two countries, something neither side wanted.It’s not immediately clear when trade talks between the U.S. and China will resume.