The United States and China have reached an agreement to temporarily lower tariffs on each other for 90 days while trade negotiations continue. The announcement came after two days of closed-door discussions in Geneva involving U.S. Trade Representative Jamieson Greer and U.S. Secretary of the Treasury Scott Bessent. “We’ve managed to agree on a 90-day pause to allow for further constructive dialogue,” said Greer during a press conference.
Bessent added, “Our aim is to work towards a more stable and balanced trade relationship.”
Under the new agreement, the United States and China will each lower tariffs by 115% while retaining an additional 10% tariff. These actions will take effect by May 14, 2025. China will remove the retaliatory tariffs announced since April 4, 2025, and will suspend or remove non-tariff countermeasures taken since April 2, 2025.
It will also suspend its initial 34% tariff on the United States for 90 days, retaining a 10% tariff during the pause period. The United States will remove the additional tariffs imposed on China on April 8 and April 9, 2025, but retain all duties imposed before April 2, 2025, including Section 301 tariffs, Section 232 tariffs, tariffs related to the fentanyl national emergency, and Most Favored Nation tariffs. The U.S. will suspend its 34% reciprocal tariff for 90 days, retaining a 10% tariff during this period.
Both nations have agreed to establish a mechanism for continued discussions on trade and economics.
Tariff pause provides brief relief
The U.S. goods trade deficit with China was $295.4 billion in 2024, the largest with any trading partner.
Today’s agreement aims to address these imbalances to deliver real, lasting benefits to American workers, farmers, and businesses. The United States and China will also take aggressive actions to stem the flow of fentanyl and other precursors from China to illicit drug producers in North America. The apparent thaw in relations, albeit temporary, was the latest concession from the Trump administration.
Stocks had tumbled last month following the announcement of unexpectedly high tariffs on dozens of countries, but have since rebounded as various tariff exemptions and pauses were introduced. The S&P 500 logged its biggest gain in over a month on Monday after the announcement, gaining 3.3 percent, its best day since April 9. The tech-heavy Nasdaq climbed even higher, rising more than 4 percent.
While the temporary deal offers a reprieve to global markets and businesses affected by the tariffs, the business community remains cautious. The worry is that if substantial agreements are not reached within these 90 days, the situation might revert or escalate further. With high expectations from both sides, the focus will now shift to whether the negotiators can overcome their deep-seated differences and align on key trade issues.