After two days of trade negotiations, the United States and China have reached an agreement to significantly reduce tariffs. However, the U.S. has stated that tariffs on specific industries such as semiconductors and steel and aluminum will remain unchanged. In response, U.S. Treasury Secretary Bezent clarified on Monday that the U.S. seeks to strategically decouple from certain goods in specific industries with China, rather than a comprehensive decoupling across all goods.
Bezent, in an interview with CNBC’s “Squawk Box,” stated, “We do not want to completely decouple from China.” “But what we really want is the decoupling of strategic essential goods, as we were unable to obtain these necessities during the Covid pandemic, and we realize that an efficient supply chain is not necessarily a flexible supply chain.”
“We want to produce our own steel.” Bezent said, “This is what we are doing. Equal tariffs have nothing to do with industry-specific tariffs.”
Bezent clarified in an interview with Bloomberg TV on Monday, “The United States will strategically decouple from goods that involve national security interests discovered during the Covid pandemic, such as semiconductors, pharmaceuticals, and steel.”
Over the past weekend, Bezent and U.S. Trade Representative Jamieson Greer held two days of negotiations with Chinese Vice Premier He Lifeng in Geneva, Switzerland. An agreement was reached to mutually reduce tariffs by 90 days, with a reduction rate of 115%. China’s tariffs on U.S. goods were reduced to 10%, while U.S. tariffs on Chinese goods were reduced to 30% (including a 20% tariff related to the fentanyl issue).
Bezent stated that imposing tariffs lower than 10% on China is “impossible,” but the 34% tariff level set by the President on April 2nd “will be a ceiling.” He also mentioned that if Beijing effectively participates in resolving the U.S. fentanyl crisis, “we may see some fentanyl tariffs being lifted.”
U.S. Trade Representative Greer stated that industry-specific tariffs on goods produced in China, such as semiconductors, medical equipment, and steel and aluminum products, are not part of the U.S.-China agreement.
Secretary of the Treasury Bezent said, “I believe that in the coming weeks, we will once again hold meetings to reach a more comprehensive agreement.” However, the specifics of the meeting, such as the location, have not been determined yet, but a “mechanism” for further negotiations has been established.
“We have established a mechanism with China to avoid pressure for tariff increases.” He said, “I have seen the economic situation in China. We can also see the situation of exports to the United States. We reiterate once again that we are a country with a trade deficit, and historically, the negotiating position of a deficit country is more advantageous.”
The Treasury Secretary also mentioned that during the negotiations in Switzerland, both sides engaged in “very long and in-depth” discussions on the fentanyl issue.
Earlier in Geneva, Bezent told reporters, “We expect that as the negotiations progress, it is also possible to reach a purchase agreement to balance our largest bilateral trade deficit.”