As of May 13, 2025, there are significant signs of easing in the China-U.S. trade war. In high-level closed-door talks held in Geneva, Switzerland from May 10 to 11, both sides reached a 90-day temporary tariff truce agreement and established a permanent economic and trade consultation mechanism, laying the foundation for future cooperation.
📉 Tariff adjustments and agreement content
Tariff reduction: The United States will lower tariffs on Chinese goods from 145% to 30%, while China will reduce tariffs on U.S. goods from 125% to 10%. In addition, both sides agreed to suspend the implementation of an additional 24% tariff for a period of 90 days.
Non-tariff measures: China has committed to suspending or canceling non-tariff countermeasures against the United States starting from April 2, 2025
Permanent consultation mechanism: Both sides have established a permanent economic and trade consultation mechanism, jointly led by the
Chinese Vice Premier and the U.S. Secretary of the Treasury, Scott Basset, and Trade Representative Jamison Greer, aimed at preventing future trade tensions from escalating.
Market response and economic impact
After the agreement was reached, global market reactions were positive:
Stock market rise: The U.S. stock market rose sharply, with the S&P 500 index up 3.3% and the Nasdaq index up 4.4%.
RMB appreciation: The RMB strengthened against the U.S. dollar, with the offshore RMB exchange rate rising by more than 300 points.
Decline in safe-haven assets: Gold prices fell by 2.5%, reflecting a easing of market risk aversion.
Outlook and challenges
Despite this agreement bringing short-term relief to China-U.S. trade relations, the following challenges remain:
Agreement duration: The current tariff truce agreement is only for 90 days, and it is uncertain whether a long-term agreement can be reached in the future
Structural issues: There are still differences between the two sides on structural issues such as technology transfer and intellectual property protection, which need to be resolved through further negotiations
