U.S. and China Agree to Temporary Tariff Reduction, Easing Trade Tensions
On May 11, 2025, the United States and China announced a significant but temporary trade agreement aimed at de-escalating the ongoing trade war between the world’s two largest economies. The deal, finalized during weekend talks in Geneva, Switzerland, reduces reciprocal tariffs on each other’s goods for a 90-day period, providing a window for further negotiations to address persistent trade imbalances and other issues.
Under the agreement, the U.S. will lower its reciprocal tariffs on Chinese imports from a staggering 145% to 30%, which includes a 10% baseline tariff and a 20% tariff related to fentanyl precursor exports. Similarly, China will reduce its reciprocal tariffs on U.S. goods from 125% to 10% for the same 90-day period. This temporary rollback is intended to stabilize markets and foster dialogue, with both sides expressing a shared interest in avoiding economic decoupling. U.S. Treasury Secretary Scott Bessent emphasized the mutual benefits, stating, “We concluded that we have shared interests, and we both have an interest in balanced trade.”
However, the agreement does not affect several existing U.S. tariffs on Chinese goods. The Section 301 tariffs, ranging from 7.5% to 100% on various products, remain in place to address unfair trade practices. Additionally, Section 232 tariffs imposing 25% duties on steel, aluminum, and automotive products continue unchanged, as do the 20% tariffs imposed earlier in 2025 to combat the flow of fentanyl-related chemicals from China. These measures reflect the U.S.’s ongoing commitment to protecting national security, economic resilience, and public health.
The temporary tariff reduction has sparked cautious optimism in global markets, with Nasdaq futures jumping 3.4% and Taiwan futures rising 300 points in response to the news. However, analysts warn that the 90-day pause is merely a starting point, with significant challenges remaining. U.S. Trade Representative Jamieson Greer noted a “positive path forward” on addressing fentanyl smuggling, but deeper structural issues in U.S.-China trade relations will require sustained effort.
As negotiations continue, businesses and consumers on both sides await clarity on whether this temporary reprieve will lead to a more permanent resolution or merely delay further escalation. For now, the agreement marks a critical step toward stabilizing bilateral trade, even as key tariffs remain firmly in place.
Source: https://www.whitehouse.gov/fact-sheets/2025/05/fact-sheet-president-donald-j-trump-secures-a-historic-trade-win-for-the-united-states/