U.S. and China agree to 90-day tariff reduction to ease trade tensions

The United States and China have announced a temporary rollback of tariffs on each other’s goods, offering a crucial pause in a long-running trade war that has strained global markets and disrupted supply chains.

In a surprising turn of events, the United States and China have agreed to a temporary truce in their ongoing trade conflict, announcing a 90-day suspension of most tariffs on each other’s goods. The agreement, made public through a joint statement released Monday, follows intense negotiations in Geneva over the weekend.

The world’s two largest economies reported “significant progress” during the talks, with both parties reaffirming their commitment to fostering a “stable, long-term, and mutually advantageous” trade relationship.

The breakthrough has had immediate ripple effects in global markets. U.S. futures soared, with the Dow, S&P 500, and Nasdaq futures all posting strong gains. Asian markets followed suit — Hong Kong’s Hang Seng index rose nearly 3% — and the dollar strengthened. Meanwhile, the price of gold dipped, typically a sign of investor confidence.

Tariffs xcaled back but not eliminated

While some tariffs will remain in place — including those related to Chinese-made fentanyl, which the U.S. maintains at 20% — both nations agreed to sharply reduce the broader levies. Effective May 14, the U.S. will scale its tariffs on Chinese imports back from 145% to 30%, and China will lower its tariffs on U.S. goods from 125% to 10%.

These changes are intended to last for three months as the countries explore a longer-term solution.

The trade war, initiated under President Donald Trump’s administration, has weighed heavily on both economies. In the U.S., economic growth slowed earlier this year, partially due to businesses accelerating imports to beat impending tariffs. In China, exports to the U.S. have fallen, and factory activity reached a 16-month low in April — a sign of pressure on its manufacturing sector.

Dan Ives, a senior analyst at Wedbush Securities, called the deal a “positive surprise” and noted that it may pave the way for a broader agreement in the near future.

“This is a critical reset moment,” Ives said. “If momentum continues, we could see more aggressive tariff rollbacks over the coming months.”

🚨 BREAKING overnight: US and China agree to a 90-day pause on tariffs.

Tariffs on Chinese imports reduced from 145% to 30%

Trump caved again? pic.twitter.com/wQ69YCWqUl
— Ron Smith (@Ronxyz00) May 12, 2025

Dialogue Will Continue

To maintain momentum, both governments will establish a framework for ongoing discussions, led by Chinese Vice Premier He Lifeng, U.S. Treasury Secretary Scott Bessent, and U.S. Trade Representative Jamieson Greer. Meetings may alternate between China, the U.S., or other mutually agreed-upon locations.

“This is not about decoupling — it’s about rebuilding trust and finding common ground,” Bessent told reporters at a press briefing in Geneva. “Both nations want trade, but it has to be fair, and it has to be stable.”

China’s Ministry of Commerce echoed that sentiment, describing the joint statement as a meaningful first step toward resolving disputes through dialogue rather than confrontation.

The shift in tone from Beijing is notable. Until recently, Chinese officials insisted that Washington remove all tariffs as a condition for restarting talks. Now, both sides appear ready to compromise — at least in the short term.

Although this agreement doesn’t represent a full resolution of the trade war, it is the clearest signal yet that diplomacy may be back on the table. The coming months will be critical in determining whether the détente holds or gives way to renewed tensions.