GENEVA, May 12 – In a significant development aimed at de-escalating a prolonged trade confrontation, the United States and China announced on Monday that they have reached a temporary agreement to lower reciprocal tariffs. The move signals a possible turning point in the strained trade relationship between the world’s two largest economies, a conflict that has had global economic consequences over the past several years.
The announcement came after a high-stakes meeting in Geneva between senior U.S. and Chinese economic officials. U.S. During a joint press briefing with U.S. Trade Representative Jamieson Greer, Treasury Secretary Scott Bessent announced that both countries had settled on a 90-day suspension of additional trade actions. Under the terms of the agreement, tariff levels on both sides will be sharply lowered, dropping from above 100% to just 10%.
“Both countries represented their national interests very effectively,” Bessent stated. “We understand the importance of balanced trade, and we remain committed to making further progress toward that goal.”
This meeting marked the first in-person discussions between senior officials from both sides since President Donald Trump’s return to office. Following his re-election, Trump reignited his hardline trade policies by sharply increasing tariffs on Chinese imports. The cumulative impact of new and existing duties had pushed the total tariff level on some categories of Chinese goods to as high as 145%. These actions revived many of the protectionist measures implemented during his first term and intensified by his successor.
In retaliation, China implemented several measures of its own. These included export restrictions on key rare earth minerals—resources critical to U.S. defense manufacturing and high-tech industries—as well as raising tariffs on a broad range of American products to levels reaching 125%. The result was a dramatic slowdown in trade between the two nations, effectively freezing nearly $600 billion in annual commerce and contributing to significant instability in global supply chains.
Beyond economic disruption, the trade war caused ripple effects across financial markets, with businesses and investors growing increasingly wary of prolonged uncertainty. The steep tariffs increased expenses for both raw materials and final products, put pressure on manufacturing activities, and intensified concerns about stagflation—a troubling mix of slow economic growth and rising inflation. Some U.S. and Chinese companies were forced to cut jobs or delay expansion plans as they adjusted to the rising costs and unpredictability.
However, signs of optimism began to emerge as both governments appeared more open to finding common ground. Over the weekend, talks in Geneva reportedly took a constructive turn, with both delegations agreeing to move toward de-escalation while continuing negotiations over broader trade imbalances and technology disputes.
Market reactions to the announcement were immediate. U.S. stock futures climbed in early trading Monday, reflecting investor relief that a more severe economic conflict may be averted. The U.S. dollar also strengthened against safe-haven currencies like the Japanese yen and Swiss franc, indicating renewed confidence in global economic stability.
Analysts view this latest agreement as a potential first step toward rebuilding trust between the two powers. While the 90-day pause is not a permanent solution, it allows time for both governments to negotiate more comprehensive trade reforms and address long-standing issues such as intellectual property rights, forced technology transfers, and unequal market access.
The timing of this deal is particularly important. With both countries facing domestic economic headwinds—such as slowing growth in China and inflationary pressures in the U.S.—there is increasing political will on both sides to stabilize trade relations. Businesses in both countries have also lobbied for a resolution, warning of long-term damage if tariffs remain elevated.
Still, challenges remain. Some American industries remain skeptical that China will follow through on pledges to reform trade practices. Likewise, Chinese officials remain cautious about U.S. intentions and the possibility of further sanctions or export controls.
Despite the lingering doubts, Monday’s announcement offers a much-needed pause in a conflict that has dragged on for years. For now, the scaling back of tariffs gives businesses and markets breathing room, while negotiators return to the table to hammer out longer-term solutions.
Whether this truce holds or leads to a more enduring agreement will depend on the willingness of both governments to compromise and prioritize global economic stability over short-term political wins. But for the first time in a long while, there is hope that a resolution to one of the world’s most consequential trade disputes may finally be within reach.