In a surprising turn of events, the United States and China have reached a temporary truce in their ongoing trade war, agreeing to drastically reduce tariffs on each other’s imports for the next 90 days. The announcement came after high-level meetings in Geneva—marking the first direct talks since Donald Trump’s return to the White House.
The deal immediately sent a wave of optimism through global markets, boosting U.S. stocks and strengthening the dollar. According to the agreement, the U.S. will cut tariffs on Chinese goods from 145% to 30%, while China will lower its tariffs on American imports from 125% to 10%.
Although the agreement doesn’t reinstate the de minimis exemptions on low-value e-commerce shipments from China and Hong Kong—removed earlier this month—it goes beyond what many analysts expected. Zhiwei Zhang, chief economist at Pinpoint Asset Management, said, “I was expecting a cut to around 50%. This is much better news for both economies and for global supply chains.”
The trade war, which had stalled nearly $600 billion in bilateral trade, sparked fears of stagflation and layoffs in both countries. Now, this unexpected détente provides breathing room for industries and investors alike.
The talks were described as “candid, in-depth, and constructive” by China’s Vice Premier He Lifeng. U.S. Treasury Secretary Scott Bessent echoed that sentiment, saying both sides were committed to balanced trade and did not want to move toward decoupling.
“The high tariffs essentially acted like an embargo,” Bessent explained. “Both countries have now expressed that they want open, fair trade—not economic isolation.”
As expected, the market response was swift. Shipping giant Maersk saw its shares jump over 12% after revealing earlier that container volumes between the two countries had plummeted due to the trade tensions. Luxury brands such as LVMH and Gucci-owner Kering also enjoyed gains of over 6%, highlighting the global significance of this breakthrough.
While Boeing hasn’t publicly commented, the deal could affect dozens of aircraft previously blocked by China’s retaliatory tariffs. Meanwhile, Bessent hinted at more meetings in the coming weeks to work on a more permanent solution. “There’s a clear path forward,” he said, “and we now have a mechanism to address deeper issues like non-tariff barriers, currency manipulation, and state subsidies.”
Interestingly, Chinese negotiators also signaled their willingness to cooperate on curbing fentanyl exports, a central point in Trump’s justification for the tariff hikes. For the first time, Beijing appeared ready to address the illegal flow of precursor chemicals into the U.S.
Though temporary, this 90-day tariff cut marks a crucial step toward restoring trust and stability in global trade. Whether this will lead to a long-term agreement remains uncertain, but for now, the world is breathing a sigh of relief.
