The United States and China have agreed to pause the tariff war. Image: France24

By Guillermo Alvarado

During negotiations in Geneva, the U.S. and Chinese governments reached an agreement to pause the tariff war unleashed by President Donald Trump, which kept markets around the world on edge.

This is not the first time the White House has had to backtrack on a measure implemented by the president. This measure broke with all the rules established for international trade and threatened an era of uncertainty for trade and, ultimately, the development of countries.

Since the time of the Phoenicians, who encouraged trade between peoples with coasts on the Mediterranean Sea, trade has been defined as an act of good faith (bona fide in Latin) between participants.

Much later, in the 18th century, the Scotsman Adam Smith and the Englishman David Ricardo laid the foundation for international trade with their respective theories of absolute and comparative advantages. The idea that both the buyer and the seller benefit from trade was paramount in these theories.

Far from being a theorist, Trump wanted to establish that trade should only serve to "make America great again."

Gradually, this madness has been pushed back. For example, the Geneva agreement shows that Washington and Beijing have decided to reduce their bilateral customs tariffs by 115 percent for 90 days while a more comprehensive agreement is reached.

As a result, Chinese products will be taxed at a rate of 30 percent when entering the United States, while the United States will be subject to a tariff of 10 percentage points in China.

As usual, Trump celebrated the compromise as a personal victory, despite it being a rollback of an impulsive measure in total disagreement with reality and the rules established by the international community to regulate trade.

U.S. Treasury Secretary Scott Bessent seemed more relaxed when he said that neither country wants a decoupling of trade and that both will continue to negotiate on the matter.

China's Ministry of Commerce welcomed the substantial progress that benefits the overall common interest.

Another result of the meetings was the establishment of a system of bilateral consultations aimed at preventing new trade crises—a sensible idea, considering that both countries have the largest economies in the world.