We want trade. We want greater trade balance.
US tariffs on Chinese goods drop from 145% to 30%, while China reduces US import duties from 125% to 10% over the initial 90-day period. Global markets surged on the news, with US stock futures rising 2-3.5% and Asian indices climbing, reflecting investor relief from the trade conflict.
- US tariffs on Chinese goods drop from 145% to 30% for 90 days; China cuts US import duties from 125% to 10%
- Negotiations took place over a weekend in Geneva between the two largest economies
- US stock futures rose 2-3.5%; Hong Kong's Hang Seng index climbed over 3%
- 20% tariffs on fentanilo-related goods remain in place
- Formal dialogue mechanism established led by He Lifeng, Scott Bessent, and Jamieson Greer
The US and China agreed to drastically reduce tariffs for 90 days following marathon negotiations in Geneva, marking a significant de-escalation in their trade war and boosting global markets.
After a weekend of intensive negotiations in Geneva, the United States and China announced Monday that they would dramatically cut tariffs on each other's goods for an initial 90-day period. The agreement, delivered through a joint statement, represents an unexpected reversal in a trade conflict that has roiled global markets, disrupted supply chains, and stoked recession fears since President Donald Trump imposed sweeping tariff increases.
The numbers tell the story of the shift. Starting May 14, the United States will reduce its general tariffs on Chinese products from 145 percent to 30 percent. China, in turn, will lower its tariffs on American imports from 125 percent to 10 percent. The only exception: Trump's 20 percent tariffs related to fentanilo, imposed in February and March, will remain in place. Both nations acknowledged in their statement the importance of building "a sustainable, long-term, and mutually beneficial economic and commercial relationship."
Investors responded with immediate enthusiasm. Dow Jones futures climbed more than 2 percent, while S&P 500 futures rose nearly 3 percent and Nasdaq Composite futures jumped more than 3.5 percent during Asian afternoon trading. Hong Kong's Hang Seng index surged past 3 percent. The relief was palpable—markets had been waiting for any sign that the two largest economies might step back from the brink.
The trade war had already left visible scars on both economies. The United States saw its gross domestic product contract in a quarter for the first time since early 2022, as importers rushed to bring in goods before tariffs took effect. China's exports to the United States plummeted last month, hammering the country's vast manufacturing sector. Factory activity in China contracted at its fastest pace in 16 months in April, pushing Beijing to pursue new economic stimulus measures.
Dan Ives, managing director at Wedbush Securities, called the agreement to suspend most tariffs on both sides the "best possible scenario" from the weekend talks. But he cautioned that this was only a beginning. "This is clearly just the start of broader and more comprehensive negotiations," he wrote, "and we expect both tariff figures to decline notably in coming months as deal negotiations advance."
The two countries have established a formal mechanism to continue discussions, led by China's Vice Premier He Lifeng, U.S. Treasury Secretary Scott Bessent, and American Trade Representative Jamieson Greer. These talks can take place in either country or a third location, by mutual agreement. At a press conference in Geneva on Monday, Bessent framed the breakthrough in stark terms: neither side wanted "decoupling," he said, and the high tariffs had amounted to an embargo that neither nation desired. "We want trade," he stated. "We want greater trade balance. And I believe both sides are committed to achieving it."
China's Commerce Ministry called the joint statement "an important step by both sides to resolve differences through dialogue and consultation on equal footing." The tone marked a sharp departure from weeks of Chinese defiance, when officials had demanded that the United States remove all tariffs before even sitting down to negotiate. The shift suggests both nations recognized that the escalation had become mutually destructive. What happens in the next 90 days—whether these reductions hold, whether deeper cuts follow, whether the fentanilo tariffs become a sticking point—will determine whether this moment becomes a genuine reset or merely a pause in a longer conflict.
Notable Quotes
This is clearly just the start of broader and more comprehensive negotiations, and we expect both tariff figures to decline notably in coming months as deal negotiations advance.— Dan Ives, managing director at Wedbush Securities
We want trade. We want greater trade balance. And I believe both sides are committed to achieving it.— Treasury Secretary Scott Bessent
The Hearth Conversation Another angle on the story
Why did both sides suddenly agree to this after weeks of deadlock?
Because the pain became undeniable. China's exports were collapsing, and America's economy contracted for the first time in years. At some point, the cost of the fight exceeds the cost of talking.
But 145 percent down to 30 percent—that's still a huge tariff. Why not go lower?
This is a 90-day trial. Both sides are testing whether the other will hold up their end. If it works, the expectation is the numbers drop further. Right now they're proving the principle: we can do this without destroying each other.
What about the fentanilo tariffs staying at 20 percent?
That's Trump's line in the sand. He's not moving on that. It's a way of saying the agreement is about trade, not about letting China off the hook on what he sees as a security issue.
The markets jumped 3 percent. Is that just relief, or do investors see real growth ahead?
Both. Relief that the uncertainty is ending—that alone is worth money. But also genuine hope that lower tariffs mean cheaper goods, easier supply chains, and less recession risk. That's real economic oxygen.
What happens if one side breaks the deal in the next 90 days?
That's the gamble. They've set up a formal dialogue mechanism with senior officials to keep talking. If either side walks away, the tariffs snap back and you're back where you started. The pressure to make it work is enormous.
So this is fragile?
Very. But fragile agreements that work are better than no agreement at all. Both countries are betting they can build something from this.