China and the U.S. Reach 90-Day Tariff Reduction Agreement: A New Step in Trade Relations

On May 12, 2025, China and the United States reached a significant agreement to substantially reduce tariffs over a 90-day period, marking a major step forward in easing trade tensions between the world’s two largest economies. The agreement was announced after two days of negotiations in Geneva, Switzerland, attended by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng.

Agreement Details

United States: Tariffs on imports from China will be reduced from 145% to 30%.

China: Tariffs on imports from the U.S. will be lowered from 125% to 10%.

The agreement also includes the establishment of a new trade consultation mechanism to foster ongoing dialogue and address economic issues between the two nations.

Market Reaction

Immediately following the announcement, global financial markets responded positively:

S&P 500 futures rose by 2.6%.

Dow Jones futures increased by 2%.

Crude oil prices climbed: WTI reached $62.68 per barrel; Brent hit $65.55 per barrel.

Asian and European stock markets saw broad gains, especially in the automotive and mining sectors.

Significance and Outlook

This agreement is seen as a positive step toward easing the prolonged trade tensions between the two countries. However, experts caution that the deal is only a temporary solution and emphasize the need for a comprehensive and long-term agreement to resolve the core issues in bilateral trade relations.

Conclusion

The 90-day tariff reduction deal between China and the United States signals a hopeful development for the global economy and opens the door to more in-depth negotiations in the future. Nonetheless, maintaining and building a sustainable trade relationship between the two powers will require ongoing efforts and mutual goodwill.