US-China Truce: Tariffs Slashed, 90-Day Pause On Reciprocal Duties

The breakthrough comes as the two economic powerhouses attempt to de-escalate a prolonged trade conflict that has rattled global financial markets and slowed economic momentum.

Under the temporary arrangement, tariffs on both sides are set to fall by more than 100 percentage points, bringing them down to 10 per cent.

Source : Freepik

In a significant development aimed at easing trade tensions, the United States and China announced an agreement on Monday to sharply reduce reciprocal tariffs. The breakthrough comes as the two economic powerhouses attempt to de-escalate a prolonged trade conflict that has rattled global financial markets and slowed economic momentum.

Following discussions in Geneva, US Treasury Secretary Scott Bessent confirmed that both countries  reached consensus on a 90-day halt to additional tariff measures. “Both countries represented their national interest very well,” Bessent said. “We both have an interest in balanced trade, the US will continue moving towards that," he added, reported Reuters.

Under the temporary arrangement, tariffs on both sides are set to fall by more than 100 percentage points, bringing them down to 10 per cent.

First High-Level Talks Since Trump’s Return

This deal emerged from the first in-person negotiations between senior US and Chinese economic officials since President Donald Trump returned to office. These Geneva talks marked a key moment in the ongoing efforts to unwind the harsh tariff regimes initiated during Trump’s first term and continued by the Biden administration.

Since retaking office in January, President Trump has raised tariffs on Chinese imports to 145 per cent, escalating duties already in place from previous trade disputes. In retaliation, Beijing imposed export restrictions on rare earth minerals—essential components for US defense systems and consumer electronics—and increased tariffs on American goods to 125 per cent.

The dialogue in Geneva, led by Bessent and US Trade Representative Jamieson Greer, was described as constructive, with both parties signalling meaningful progress in narrowing economic differences.

Trade War Disruption and Market Response

The prolonged trade standoff has had a profound impact on the $600 billion two-way trading relationship between the two nations. Businesses on both sides of the Pacific suffered as supply chains were upended, and concerns over stagflation and job losses gained momentum.

Monday’s announcement was welcomed by financial markets. Wall Street stock futures rose in early trading, while the US dollar strengthened against traditionally safe-haven currencies. Investors have been closely watching for indications of a cooling in trade tensions, which many feared could drag the global economy into a recession.

Although the 90-day pause offers only temporary relief, analysts view it as a critical step toward longer-term reconciliation. For now, the agreement provides breathing room for further negotiations and signals a willingness on both sides to pursue a more stable trade relationship.