90-day pause in the tariff war between China and the US

GENEVA, Switzerland — U.S. and Chinese officials said Monday they had reached an agreement to roll back most of their recent tariffs and declare a 90-day truce in their trade war to continue talks on resolving their trade disputes.

Stock markets rose sharply as the world's two largest economic powers stepped back from a standoff that has destabilized the global economy.

U.S. Trade Representative Jamieson Greer said the U.S. agreed to cut its 145 percent tariff rate on Chinese goods by 115 percentage points to 30 percent, while China agreed to similarly lower its rate on U.S. goods to 10 percent.

@USTradeRep head Jamieson Greer explains the agreement with China, in which both countries lower tariffs to 10%, although the 20% tariff on fentanyl remains in place, and where there is progress. pic.twitter.com/7evRpfZnxr

— Rodrigo Pacheco (@Rodpac) May 12, 2025

Greer and Treasury Secretary Scott Bessent announced the tariff reductions at a news conference in Geneva.

The two officials struck a positive tone, noting that both sides had established consultations to continue addressing their trade issues. Bessent said at the press conference after two days of talks that high tariff levels would have resulted in a complete blockade of each side's products, an outcome neither side desires.

🚨Scott Bessent: “We had an excellent trade agreement with China — and the Biden Administration chose not to enforce it. The Chinese delegation basically told us that once President Biden came into office, they just ignored their obligations." pic.twitter.com/2xc0CdK9iO

— Derrick Evans (@DerrickEvans4WV) May 12, 2025

“The consensus of both delegations this weekend is that neither side wants a decoupling,” Bessent said. “And what had happened with these very high tariffs… was an embargo, the equivalent of an embargo. And neither side wants that. We want trade.”

“We want more balanced trade,” he said. “And I think both sides are committed to achieving that.”

The delegations, escorted through the city and guarded by dozens of Swiss police officers, met for at least a dozen hours on both weekend days in a sun-drenched 17th-century villa that serves as the official residence of the Swiss ambassador to the United Nations in Geneva.

At times, delegation leaders stepped away from their teams and settled into sofas on villa patios overlooking Lake Geneva , helping to deepen personal ties in the effort to reach a long-sought agreement.

China's Ministry of Commerce said the two sides agreed to cancel 91 percent of tariffs on each other's products and suspend another 24 percent of tariffs for 90 days, bringing the total reduction to 115 percentage points.

The ministry hailed the agreement as an important step toward resolving differences between the two countries and said it lays the groundwork for further cooperation.

"This initiative aligns with the expectations of producers and consumers in both countries and serves the interests of both nations, as well as the common interests of the world," said a statement from the ministry.

China hopes the United States will stop “the erroneous practice of unilateral tariff increases” and work with China to safeguard the development of their economic and trade relations, injecting greater certainty and stability into the global economy, the ministry said.

The joint statement issued by the two countries said China also agreed to suspend or eliminate other measures it has taken since April 2 in response to the U.S. tariffs.

China has tightened export controls on rare earths , including some critical for the defense industry, and has added more U.S. companies to its export control and untrustworthy entity lists, restricting their business with and in China.

The full impact of the complicated tariffs and other trade sanctions imposed by Washington and Beijing remains uncertain. Much depends on whether they find ways to overcome entrenched differences during the 90-day suspension. Bessent said in an interview with CNBC that US and Chinese officials will meet again in a few weeks.

But investors rejoiced when trade envoys from the world's two largest economies relented, finding ways to back away from potential massive disruptions to global trade and their own markets.

S&P 500 futures jumped 2.6% and Dow Jones Industrial Average futures rose 2%. Oil prices soared more than $1.60 per barrel, and the U.S. dollar gained against the euro and the Japanese yen.

Jens Eskelund, president of the European Union Chamber of Commerce in China, welcomed the news but expressed caution. The tariffs were only suspended for 90 days, and there is great uncertainty about what lies ahead, he said in a statement.

“Businesses need predictability to maintain normal operations and make investment decisions. Therefore, the Chamber hopes to see both sides continue to engage in dialogue to resolve differences and avoid taking actions that disrupt global trade and result in collateral damage for those caught in the crossfire,” Eskelund said.

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