U.S. and China Slash Tariffs in 90-Day Truce Amid Trade War Tensions

In a significant but temporary easing of trade tensions, the United States and China have agreed to reduce tariffs on each other’s imports for 90 days. The deal, reached after two days of intense negotiations in Geneva, lowers U.S. tariffs on Chinese goods from a staggering 145% to 30%, and Chinese tariffs on U.S. imports from 125% to just 10%. The agreement includes tariffs imposed due to fentanyl-related concerns and is seen as a strategic pause to allow more room for long-term trade discussions.

Key figures from both governments, including U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, called the talks “productive” and signaled that both sides are seeking to avoid full economic decoupling. Bessent mentioned robust conversations around drug enforcement, trade imbalances, and purchasing agreements, particularly with Chinese commitments to ease regulations on sensitive exports.

Financial markets quickly responded to the truce with optimism. Stock indices across Asia and Europe rose, U.S. futures surged, and the offshore yuan appreciated by 0.5% against the dollar. Commodity markets also saw gains, with oil prices climbing and U.S. Treasury yields rising, suggesting that investors viewed the agreement as a stabilizing force—at least in the short term.

This development is the latest chapter in a long-running trade war that escalated under Trump’s “Liberation Day” policies, which imposed historically high tariffs. The retaliatory measures between the two nations disrupted over $660 billion in annual trade and alarmed businesses due to rising costs and supply chain disruptions. With this 90-day pause, both sides seem to be testing the waters for a more cooperative economic relationship.

Despite the positive momentum, experts remain cautious. Previous attempts at tariff de-escalation, including the 2020 “Phase One” deal, failed to yield lasting outcomes. The next three months will be critical in determining whether this new agreement leads to a broader settlement or sets the stage for renewed hostilities. Officials have also launched a new trade consultation mechanism, indicating that both Washington and Beijing are committed to deeper dialogue moving forward.

Source: Nairametrics