Tariff Wars Paused: US and China Strike 90-day Tariff Truce To Ease Trade Tensions

Moneylife Digital Team 12 May 2025

Investor Interest

In a significant development signalling a potential thaw in strained trade relations, US and China have signed a deal to roll back recently imposed tariffs for a 90-day period, beginning 14 May 2025. The announcement, made in Geneva following high-level trade talks, marks the first direct engagement between top US and Chinese officials since president Donald Trump assumed office and ushered in a wave of protectionist trade policies.

Under the agreement, the US will reduce tariffs on Chinese imports from 145% to 30%, while China will lower its tariffs on American goods from 125% to 10%. Both nations have agreed to a reciprocal rollback of 115 percentage points in tariff levels.

“We have reached an agreement on a 90-day pause and to substantially move down the tariff levels,” says US treasury secretary Scott Bessent at a press conference. “We had a very robust and productive discussion on steps forward on fentanyl. We are in agreement that neither side wants to decouple.”

The announcement was welcomed by financial markets, with global stock indices posting gains on hopes of easing tensions between the world’s two largest economies.

According to a joint statement, the two countries will set up a formal mechanism to continue discussions on economic and trade matters beyond the 90-day window. The Chinese delegation will be led by He Lifeng, vice premier of the state council, while the US will be represented by Mr Bessent and Jamieson Greer, the US trade representative.

The talks may rotate between locations in China, the US, or a third country, based on mutual agreement. Working-level consultations will also be held as necessary to address specific trade and economic issues, the statement says.

Mr Greer highlighted that the trade imbalance remains a concern but expressed optimism: “The deal we struck with our Chinese partners will help reduce the US$1.2tn (trillion) US global goods trade deficit,” he said, adding that the differences “were not as large as maybe thought.”

This breakthrough follows years of escalating trade hostilities that disrupted global supply chains and led to increased costs for businesses and consumers worldwide. The 90-day truce offers both sides an opportunity to revisit unresolved issues while temporarily calming the global economic environment.

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