US and China Agree to Slash Tariffs, Pause New Duties for 90 Days

The United States and China have reached a significant agreement to reduce tariffs and implement a 90-day pause on new duties, marking a critical step toward de-escalating trade tensions between the world’s two largest economies. The joint statement, released on Monday following high-level talks in Geneva, outlines a mutual commitment to lower reciprocal tariffs from 145% to 30% and establish a consultation mechanism for ongoing economic dialogue.

Under the agreement, the US will suspend 24 percentage points of the additional ad valorem duty on Chinese goods set by Executive Order 14257, retaining a 10% rate, and remove higher duties imposed by subsequent orders. China will mirror this by suspending 24 percentage points of its duties on US goods, as outlined in State Council announcements, while also removing non-tariff countermeasures introduced since April 2, 2025. The 20% US tariffs on Chinese imports linked to fentanyl will remain in place, resulting in a total US tariff rate of 30% on China.

US Treasury Secretary Scott Bessent, speaking alongside US Trade Representative Jamieson Greer, described the talks as “productive,” noting that the Geneva setting fostered a positive atmosphere. “Both countries represented their national interests well, and we have a shared interest in balanced trade,” Bessent said. China’s Vice Premier He Lifeng will lead Beijing’s delegation in future discussions, which may alternate between the two countries or a third location.

The agreement follows a tumultuous period of tit-for-tat tariff hikes, with US duties on Chinese imports peaking at 145% and China retaliating with 125% tariffs on US goods, disrupting nearly $600 billion in bilateral trade. The escalation, triggered by President Donald Trump’s April 2 executive orders, led to market volatility and fears of a global recession. Posts on X reflected cautious optimism, with one user noting, “Markets are rallying, but it’s a temporary truce for now.”

Analysts suggest the 90-day pause provides a window for substantive negotiations but warn that unresolved issues, such as technology transfers and market access, could derail progress. Tai Hui, APAC chief market strategist at J.P. Morgan Asset Management, called the tariff reduction “larger than expected,” emphasizing that both sides recognize the economic fallout of prolonged trade wars. However, he noted that the 90-day period may be insufficient for a comprehensive deal.

The deal has sparked a market rally, with the Nasdaq jumping nearly 10% and the S&P 500 rising over 9% on Monday, though volatility persists amid uncertainty over long-term outcomes. US businesses, particularly in retail and technology, welcomed the reprieve, as tariffs had driven up costs for goods like electronics and apparel. However, some economists caution that the remaining 30% tariffs could still strain supply chains and consumer prices.

As the US and China prepare for further talks, the international community is watching closely, hoping this truce can pave the way for a sustainable trade relationship. With global growth at stake, the success of these negotiations will hinge on both nations’ ability to address deep-seated economic grievances while maintaining open dialogue.