The United States and China have jointly announced an agreement to significantly reduce their retaliatory tariffs for a 90-day period, marking a substantial de-escalation in the ongoing trade war that has unsettled global markets and stirred concerns over a potential economic downturn.
Following their first high-level negotiations since President Donald Trump initiated the trade dispute, the two largest economies issued a joint statement confirming their decision to lower their previously triple-digit tariffs to more moderate levels, while agreeing to continue dialogue.
US Treasury Secretary Scott Bessent characterised the weekend’s discussions with Chinese Vice Premier He Lifeng and international trade representative Li Chenggang as “productive” and “robust.”
“Both sides showed a great respect,” Bessent told reporters during a press briefing.
Last month, the Trump administration had imposed a sweeping 145 percent tariff on Chinese imports — substantially higher than the 10 percent levies placed on goods from other nations during the broader tariff campaign. In retaliation, Beijing imposed a 125 percent duty on American products.
As part of the new agreement, the United States will reduce its tariff rate on Chinese goods to 30 percent, while China will cut its corresponding rate to 10 percent.
Chinese officials praised the progress made at the talks, which were discreetly held at the Geneva residence of Switzerland’s ambassador to the United Nations.
“This move… is in the interest of the two countries and the common interest of the world,” the Chinese Ministry of Commerce said, expressing hope that Washington would continue collaborating to “correct the wrong practice of unilateral tariff rises.”
In response to the agreement, global stock markets and the US dollar — both of which had slumped following the initial imposition of tariffs in April — rallied strongly.
– Fentanyl-Related Tariffs to Remain Unchanged –
Despite the overall reduction in tariff levels, the US will maintain an additional 20 percent duty related to concerns over Chinese chemical exports used in the production of fentanyl, US Trade Representative Jamieson Greer explained.
“Those remain unchanged for now,” Greer said, though he noted that “both the Chinese and United States agreed to work constructively together on fentanyl and there is a positive path forward there as well.”
As part of the agreement, both parties committed to establishing a structured mechanism for ongoing discussions regarding trade and economic relations.
“I think we leave with a very good mechanism to avoid the unfortunate escalations,” Bessent stated, adding that the previous tariff impositions had effectively created a trade “embargo” between the two nations.
He further remarked, “The nature of what has happened since April 2 could have been avoided if we had had this kind of mechanism in place.”
According to the Chinese Ministry of Commerce, the two sides will continue consultations on a rolling basis, either regularly or as needed, in the US, China, or mutually agreed third-party countries.
– Concerns Persist Despite Breakthrough –
Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said in a note that the outcome of the talks represented a notable diplomatic success for China.
“China took a tough stance on the US threat of high tariffs and eventually managed to get the tariffs down significantly without making concessions,” Zhang observed.
Wang Wen, Dean of the Chongyang Institute for Financial Studies at Renmin University of China, said the accord “exceeded expectations,” describing it as “the biggest easing of tensions… since the global tariff war” began.
However, Wang also issued a warning that unresolved issues could reignite the conflict. “Uncertainties remain,” he said, cautioning that without tangible progress during the 90-day window, “it is possible that the tariff war will resume.”
The trade standoff between Washington and Beijing has significantly impacted global markets, with fears that prolonged tariffs could fuel inflation and precipitate a broader economic slowdown.
The Geneva meeting followed closely on the heels of Trump’s announcement of a trade agreement with the United Kingdom — the first such deal since the US began implementing its global tariff strategy.
Ngozi Okonjo-Iweala, Director-General of the World Trade Organization, commended the developments during the talks, calling them a “significant step forward” with promising implications.
“Amid current global tensions, this progress is important not only for the US and China but also for the rest of the world, including the most vulnerable economies,” she said.
