In a landmark shift aimed at calming global economic tensions, the United States and China have agreed to drastically reduce their reciprocal tariffs for a 90-day period, offering a rare window for trade negotiations and global market stabilization.
Historic Tariff Cuts Announced
U.S. Treasury Secretary Scott Bessent confirmed from Switzerland that both countries are slashing their trade tariffs by a staggering 115 percentage points. Under the agreement:
U.S. tariffs on Chinese goods are dropping from 145% to 30%
Chinese tariffs on U.S. goods are falling from 125% to 10%
The temporary deal marks a significant pause in a years-long trade war that has strained supply chains, spooked global markets, and threatened economic growth worldwide.
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| US Treasury Secretary Scott Bessent (L) and US Trade Representative Jamieson Greer speak to the media after talks between senior U.S. and Chinese officials on tariffs at the residence of the permanent Swiss ambassador tothe United Nations in Geneva on May 11, 2025 . VALENTIN FLAURAUD/AFP VIA GETTY IMAGES |
Why This Matters
This reduction in levies could pave the way for a long-term resolution to the trade conflict between the world’s two largest economies. The decision provides immediate relief to businesses and consumers concerned about inflation and recession.
The agreement also comes on the heels of a separate U.S.-U.K. trade pact, signaling that the Trump Administration may be pivoting toward broader global trade stabilization.
Markets React with Optimism
Wall Street responded with enthusiasm. As of the announcement:
NASDAQ 100 Futures surged 3.79%
S&P Mid Cap 400 climbed 2.73%
S&P 500 Mini rose 2.74%
Daniel Ives, Managing Director at Wedbush, called the development a “dream scenario” and predicted potential new highs for the market and tech sector in 2025.
“This move likely takes a recession off the table for now,” Ives added.
China’s Response
A spokesperson for China’s commerce ministry urged further cooperation, stating through Xinhua:
“It is hoped that the U.S. side will continue to work with China...to maintain the healthy, stable and sustainable development of China-U.S. economic and trade relations.”
What’s Next?
The real challenge begins now. The 90-day window offers negotiators a crucial opportunity to hammer out deeper agreements on trade and related issues, including illicit drug flows and technology transfers. The tone of the talks has notably improved, giving reason for cautious optimism.
Additional trade deals — especially those involving key U.S. partners — are expected to be announced in the coming days.
Bottom Line: For now, global markets are breathing a sigh of relief. But the world will be watching closely as the U.S. and China work through the next phase of one of the most consequential economic negotiations of the decade.
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