U.S. and China Reach Tariff Truce in Hopes of Easing Trade Tensions

In a significant development that could ease the economic strain between the world’s two largest economies, the United States and China temporarily agreed to slash tariffs on each other’s goods for 90 days. The move, unveiled on Monday, is intended to create breathing room for further negotiations amid rising fears of an extended trade war started by Donald Trump’s tariffs.

The deal, announced jointly in Geneva, where top officials from both nations met over the weekend, will see the United States reduce its tariff rate on Chinese imports from 145 per cent to 30 per cent. In return, China will lower its own import duties on American goods from 125 per cent to 10 per cent.

“This is a recognition that we have a shared interest in economic stability. The consensus from both delegations is that neither side wanted a decoupling.” U.S. Treasury Secretary Scott Bessent said during a press briefing.

The agreement marks a rare moment of cooperation in an otherwise volatile relationship that has seen tit-for-tat measures escalate since early 2024. For months, Trump tariffs have disrupted global supply chains, rattled markets, and placed pressure on key industries ranging from consumer electronics to agriculture.

China, in particular, had taken aggressive steps in response to U.S. President Trump’s tariffs. In April, Beijing ordered strict export restrictions on rare earth elements and industrial magnets—materials critical to manufacturing cars, aircraft, and semiconductors. These countermeasures had begun to affect industries worldwide, prompting fears of broader economic repercussions.

According to the new agreement, China will now suspend or revoke those retaliatory measures during the 90-day window. Both sides emphasised that this truce is temporary but represents a mutual willingness to find a long-term resolution over arbitrary Trump tariffs.

While the tariff reductions themselves are short-term, Secretary Scott Bessent hinted at deeper negotiations underway. One potential point of discussion includes China agreeing to purchase greater volumes of U.S. goods, which could help reduce the U.S. trade deficit—a longstanding point of contention for American policymakers.

The deal has already sparked optimism among some global markets and business leaders who have pushed for de-escalation. Yet, scepticism remains over whether a permanent solution is possible, given the deep-rooted structural issues that underlie the trade dispute, including concerns over intellectual property, state subsidies, and access to domestic markets.

For now, though, the détente signals a hopeful pause in a conflict that has threatened to fracture the global economic order. With both governments under pressure—President Biden heading into a critical election year and Beijing grappling with slowing economic growth—the incentive to find common ground appears stronger than ever.

Trade analysts caution that if talks collapse at the end of the 90 days, tariffs could snap back into place, perhaps even harsher than before. For now, though, the global economy can exhale—at least temporarily—as Washington and Beijing take a tentative step back from the brink.