US-China Agree to Slash Tariffs in Breakthrough Deal, Easing Global Economic Fears

In a major development, the United States and China have agreed to cut tariffs to a 10% baseline for 90 days, signaling a temporary truce in their prolonged trade war. This agreement came after high-level talks in Geneva, the first direct engagement between the two economic superpowers since Donald Trump returned to office. U.S. Treasury Secretary Scott Bessent emphasized that both sides prioritized national interests and mutual economic benefit, firmly stating that neither country seeks a full economic decoupling.

Markets responded swiftly and positively to the news. The U.S. dollar climbed against major currencies, and Wall Street futures rose, reflecting renewed investor confidence. With around $600 billion in bilateral trade previously stalled and fears of stagflation mounting, the easing of tariffs provided much-needed relief for global supply chains and industries affected by import-export disruptions.

The Geneva discussions took place amid heightened geopolitical tension, following Trump’s earlier decision to raise tariffs on Chinese goods to 145%. China had responded with export restrictions on critical rare earth elements and tariffs of up to 125% on U.S. imports. Officials on both sides now view those extreme measures as having bordered on an economic embargo—something they say they are keen to avoid going forward.

In addition to the tariff rollback, both governments agreed to establish a new economic dialogue forum to continue talks and manage disputes. While Trump described the negotiations as a “total reset,” Chinese Vice Premier He Lifeng opted for more cautious language, citing “substantial progress.” Separate but related discussions on the fentanyl crisis were also held and described as productive, though they remain on a different diplomatic track.

Experts say this deal may mark a turning point in global trade relations. Economists like Zhiwei Zhang from Pinpoint Asset Management called the scale of the tariff cut “better than expected,” and praised the move as a step toward stabilizing the global economy. Although temporary, the 90-day pause offers breathing room for both sides to seek a longer-term resolution and reduce the risk of another global economic shock.

Source: Reuters