As of May 12, 2025, the United States and China have reached a significant agreement to ease their ongoing trade war by mutually reducing tariffs for a 90-day period. This development follows high-level negotiations in Geneva between U.S. Treasury Secretary Scott Bessent, Trade Representative Jamieson Greer, and Chinese Vice-Premier He Lifeng.
Key Highlights of the Agreement
Tariff Reductions: The U.S. will lower its tariffs on Chinese imports from 145% to 30%, while China will reduce its tariffs on U.S. goods from 125% to 10%.
Duration: These reductions are set for an initial 90-day period, during which both nations will continue negotiations to address broader trade issues.
Market Reactions: The announcement led to a positive response in global financial markets, with significant gains in U.S. stock futures and Asian equities. The U.S. dollar strengthened, and yields on 10-year Treasury notes rose, indicating increased investor confidence.
Additional Measures: China has agreed to suspend or cancel certain non-tariff measures previously adopted in retaliation against the U.S.
Implications and Outlook
This temporary truce aims to prevent further economic damage and stabilize global trade. While the agreement marks a significant step toward resolving trade tensions, analysts caution that it is a temporary measure. The underlying issues remain unresolved, and the outcome of ongoing negotiations will be crucial in determining long-term trade relations between the two countries.
For businesses and investors, this development offers a window of relief and an opportunity to reassess strategies amid the evolving trade landscape.
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