The United States (U.S.) and China have agreed to slash their tariffs in a temporary 90-day truce.
Starting Wednesday, the United States will lower its punitive tariffs on Chinese goods from 145% to 30%. China will respond in kind, dropping its retaliatory duties from 125% to 10%.
This is a big change from the near-embargo levels both sides had maintained, freezing nearly $600 billion in two-way trade and straining global supply chains.
For months, there have been high tariffs, factory slowdowns, and markets on edge. Now, with this deal, the two countries are finally showing willingness to talk, not threaten.
Speaking from Geneva after two days of negotiations, U.S. Treasury Secretary Scott Bessent said plainly, “Both countries represented their national interest very well.” He added, “We both have an interest in balanced trade, the U.S. will continue moving towards that.”
The deal, reached during face-to-face meetings at the U.N. ambassador’s villa overlooking Lake Geneva, also includes a commitment to ongoing discussions, alternating between the U.S. and China. Both governments published a joint statement outlining the framework for continued talks.
“The consensus from both delegations this weekend is neither side wants a decoupling,” Bessent said. “And what had occurred with these very high tariffs … was the equivalent of an embargo, and neither side wants that. We do want trade.”
This unexpected softening comes just months after President Trump, having returned to office in January, escalated the trade war to new heights by raising tariffs to 145%.
China retaliated with equally aggressive tariffs and export restrictions on rare earth materials, key inputs for U.S. industries ranging from defence to consumer electronics.
Markets reacted instantly. Wall Street futures jumped. The Hang Seng in Hong Kong surged by 3.4%. In Europe, container shipping giant Maersk rose more than 12%, and luxury brands like LVMH and Kering recorded gains of 7.4% and 6.7% respectively. Oil prices also rose, with Brent Crude climbing 2.8%.
Economists had expected a more modest rollback, if any. Zhiwei Zhang of Pinpoint Asset Management said, “This is better than I expected. I thought tariffs would be cut to somewhere around 50%.” He added, “Obviously, this is very positive news for economies in both countries and for the global economy.”
But don’t mistake this deal for a full reconciliation. The U.S. tariffs targeting critical sectors such as electric vehicles, semiconductors, steel, and pharmaceuticals will remain in place. According to Bessent, these areas are still considered strategic and vulnerable.
“We have identified 5 or 6 strategic industries and supply chain vulnerabilities and we will continue moving towards US independence or reliable supplies of allies on those,” he said.
While much of the attention was on tariffs, the discussions unexpectedly touched on the U.S. fentanyl issue, a national security issue that Trump cited when imposing some of the original tariffs.
Chinese negotiators reportedly showed unusual openness to cooperation. A Chinese deputy minister was specifically sent to address the opioid issue, which Bessent later described as “the upside surprise for me from this weekend.”
It’s too early to say whether this 90-day truce will lead to a lasting agreement. But it has halted, at least temporarily, a damaging escalation.
This weekend’s meetings may just be the start of a longer, complicated road toward resolving issues over intellectual property, forced technology transfers, and unfair subsidies.
President Trump, speaking before the deal was formally announced, described the talks as “a total reset… in a friendly, but constructive, manner.”
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