US-China Trade War Ceasefire: A Tentative Truce
United States and China decide on a 90-day halt in escalating tariffs, as both sides plan to resume negotiations.
The globe's economic titans have taken a significant step back from their trade war standoff, with the U.S. and China announcing a 90-day truce to allow for further discussions and ultimately, a potential resolution to their long-standing trade disputes. The news sent waves of relief throughout stock markets worldwide, as economists caution that though tariffs have been reduced, they still pose a threat to the global economy.
U.S. Trade Representative Jamieson Greer revealed that the U.S. agreed to slash its 145% tariff rate on Chinese goods drastically by 115 percentage points, bringing it down to a more manageable 30%. In response, China agreed to lower its rate on U.S. goods by the same amount, translating to a 10% tariff rate.
Aggregate Embargo Averted
Greer and Treasury Secretary Scott Bessent shared the details of the tariff reductions during a press conference in Geneva, emphasizing that these reductions would significantly ease the economic pressure on both sides, preventing a complete embargo of each other's goods—an outcome neither side desires.
Onwards to More Talks
Both the U.S. and Chinese delegations expressed a positive outlook, stating their intention to engage in ongoing consultations to address their trade issues more effectively. Bessent indicated that continued high tariff levels would have resulted in a near total embargo of goods, a scenario neither side seeks to embrace. Instead, both sides are committed to achieving more balanced trade.
The high-level discussions occurred over two days at a picturesque 17th-century villa, serving as the official residence of the Swiss Ambassador to the United Nations in Geneva. The security detail escorting the delegations consisted of numerous Swiss police officers, and at times, leaders from both sides convened informally, strengthening personal bonds in their quest for a much-sought deal.
Details of the Agreement
The Chinese Commerce Ministry confirmed that the two sides had agreed to cancel 91% of their respective tariffs and suspend the remaining 24% for an initial 90-day period, resulting in a total reduction of 115 percentage points. The ministry deemed the agreement an important step towards resolving trade differences and expressed optimism that it lays the groundwork for future cooperation.
China also pledged to remove other measures implemented in response to U.S. tariffs since April 2, 2025. These measures include increased export controls on rare earths and the addition of more American companies to its export control and unreliable entity lists, which restrict their business within and with China.
Market Reaction
While the exact implications of the complex tariff reductions and other trade penalties remain unclear, there was widespread jubilation among investors as trade envoys from the world's two largest economies signaled a de-escalation of their conflict. Futures for the S&P 500 surged by 2.6%, the Dow Jones Industrial Average rose by 2%, and oil prices climbed by over $1.60 per barrel. The dollar gained against both the euro and the Japanese yen.
The specific outcomes of future discussions are uncertain, and economists warn that a lasting ceasefire is not guaranteed. However, the trade truce offers a promising sign, potentially injecting more certainty and stability into the global economy.
[1] McHugh, D., Kurtenbach, E., Keaten, J., Moritsugu, K. (AP). U.S. and China reach trade deal to roll back tariffs and halt trade war. Business Insider, 2025. https://www.businessinsider.com/us-china-reach-trade-deal-roll-back-tariffs-halt-trade-war-2025-2025
[2] N/A. Tariff reductions: U.S. and China announced a 90-day truce in their trade war. Reuters, 2025. https://www.reuters.com/article/us-usa-china-tariffs/tariff-reductions-us-and-china-announce-90-day-truce-in-their-trade-war-idUSKCN0ZZ011
[3] Wu, D. (AFP). U.S. and China agree to pause tariffs for 90 days. The Straits Times, 2025. https://www.straitstimes.com/world/ Asia/U-S-and-China-agree-to-pause-tariffs-for-90-days
- The trade truce between the U.S. and China, announced in a 90-day period, will allow both nations to engage in further discussions and potentially find a resolution to their long-standing trade disputes.
- Seattle's businesses, along with the global economy, have reacted positively to the news of the temporary reduction in tariffs, as they see it as a sign of potential stability in the international trade landscape.
- The U.S. Trade Representative, Jamieson Greer, and Treasury Secretary Scott Bessent held talks in Geneva, outlining the tariff reduction details, which will ease economic pressure on both countries and prevent an embargo of each other's goods.
- The negotiations surrounding policy-and-legislation, politics, and general-news related to the U.S.-China trade war will remain an essential topic, as the two sides work towards achieving more balanced trade, addressing ongoing issues, and fostering continued cooperation.
