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The United States and China reached an agreement Monday to significantly lower their reciprocal tariffs for 90 days, easing tensions in a trade war that has destabilized global markets and raised concerns about worldwide economic decline.
The breakthrough came during the first direct talks between the two economic superpowers since President Donald Trump initiated his trade offensive last month. According to a joint statement, both nations will reduce their triple-digit tariffs to double digits while continuing negotiations.
"Both sides showed a great respect," U.S. Treasury Secretary Scott Bessent told reporters after what he described as "productive" and "robust" discussions with Chinese Vice Premier He Lifeng and international trade representative Li Chenggang.
The agreement marks a retreat from the escalating tariff battle that began when Trump imposed 145% duties on Chinese imports in April, compared to 10% levied on other countries in his global tariff initiative. Beijing had retaliated with 125% tariffs on American goods.
Under the new agreement, the United States will lower its tariffs on Chinese goods to 30%, while China will reduce its duties to 10%.
The U.S. tariff rate remains higher than China's because it includes a 20% levy related to American concerns about Chinese exports of chemicals used to manufacture fentanyl, according to U.S. Trade Representative Jamieson Greer.
"Those remain unchanged for now," Greer explained, though he added that "both the Chinese and United States agreed to work constructively together on fentanyl and there is a positive path forward there as well."
The two sides agreed to "establish a mechanism to continue discussions about economic and trade relations."
"I think we leave with a very good mechanism to avoid the unfortunate escalations," Bessent said, noting that the tariffs had essentially created a trade "embargo" between the two superpowers.
He added that "the nature of what has happened since April 2 could have been avoided if we had had this kind of mechanism in place."
According to the Chinese commerce ministry, "the two sides will conduct rolling consultations on a regular or ad hoc basis in China, the U.S. or agreed third countries."
Financial markets rallied following the announcement, reversing losses that followed Trump's global tariff initiative in April. The dollar also strengthened on the news.
China's commerce ministry hailed the "substantial progress" made during the talks, which were held at the Swiss ambassador's villa residence in Geneva.
"This move ... is in the interest of the two countries and the common interest of the world," the ministry said, adding that it hoped Washington would continue working with China "to correct the wrong practice of unilateral tariff rises."
Economic analysts offered mixed assessments of the agreement. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, called the outcome a "success" for Beijing.
"China took a tough stance on the U.S. threat of high tariffs and eventually managed to get the tariffs down significantly without making concessions," Zhang said in a note.
Wang Wen, dean of Chongyang Institute for Financial Studies at Renmin University of China, said the agreement had "exceeded expectations," calling it "the biggest easing of tensions... since the global tariff war" began. However, Wang cautioned that "uncertainties" remained, warning that without progress over the next 90 days, "it is possible that the tariff war will resume."
The agreement comes just days after Trump announced a trade deal with Britain, his first since implementing the global tariff policy. World Trade Organization head Ngozi Okonjo-Iweala praised the talks as a "significant step forward" that "bode well for the future."
"Amid current global tensions, this progress is important not only for the U.S. and China but also for the rest of the world, including the most vulnerable economies," she added.
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