The United States and China have reached a breakthrough agreement to drastically reduce the tariffs they imposed on each other in recent weeks, signaling a major step toward easing tensions in their escalating trade war.
Following high-level negotiations in Switzerland, US Treasury Secretary Scott Bessent announced that both sides will lower their punitive tariffs by 115% for a 90-day period, beginning May 14. The deal marks the first formal talks between the two countries since President Donald Trump introduced sweeping import tariffs last month, triggering a sharp downturn in global markets and fears of a broader economic slowdown.
“Neither side wants a decoupling,” Bessent said at a press briefing. “What had occurred with these very high tariffs was the equivalent of an embargo, and neither side wants that. We do want trade — more balanced trade — and both sides are committed to achieving that.”
Under the terms of the temporary truce, the United States will roll back tariffs on Chinese imports from 145% to 30%, while China will lower its levies on US goods from 125% to 10%. In addition, both countries have agreed to suspend all but 10% of their “Liberation Day” tariffs, imposed in April as part of tit-for-tat measures.
The US has retained a 20% supplemental tariff on certain Chinese goods, aimed at increasing pressure on Beijing to curb the flow of fentanyl, a synthetic opioid linked to the US overdose crisis.
Markets responded swiftly to the news. Hong Kong’s Hang Seng Index jumped 3% by the close of trading, while European stocks gained ground. Shipping firms were among the biggest winners, with Danish giant Maersk rising over 12% and Germany’s Hapag-Lloyd surging 14%. Maersk called the deal “a step in the right direction” and urged both sides to work toward a permanent resolution.
China’s Ministry of Commerce described the agreement as a “foundation to bridge differences and deepen cooperation,” adding that further talks will be critical to resolving long-standing concerns.
The US and China will establish a new mechanism to continue trade and economic discussions, led by Secretary Bessent and Chinese Vice Premier He Lifeng.
President Trump has repeatedly criticized the US trade imbalance with China, as well as Beijing’s alleged intellectual property violations and government subsidies. While he has maintained that tariffs would protect American jobs, critics — including the International Monetary Fund — warned that prolonged trade tensions would dampen global growth and disrupt supply chains.
The IMF recently downgraded its global growth forecast for the year from 3.3% to 2.8%, citing uncertainty over US-China trade policy.
The 90-day reprieve now offers a window for both sides to work toward a longer-term agreement — and for global markets to regain stability.
