TRADE WAR EASES: U.S. and China Agree to Temporary Tariff Reductions
May 13, 2025 – Geneva
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n a major step toward de-escalating global economic tensions, the United States and China have agreed to a temporary truce in their long-standing trade war. The agreement includes a 90-day reduction in tariffs on a wide range of goods, offering a window for further negotiations and potential long-term resolution.
Key Terms of the Deal:
U.S. Tariffs on China: Reduced from 145% to 30%
China’s Tariffs on U.S. Goods: Lowered from 125% to 10%
Duration: 90 days, starting immediately
Exceptions: U.S. tariffs on certain categories, such as fentanyl-related imports, remain in place
Market Reaction: The announcement sparked a global rally in financial markets. The Dow Jones surged over 1,100 points, while tech giants like Apple and Amazon saw significant stock price increases. Commodities also responded, with oil prices climbing and gold declining as investor risk appetite returned.
Economic Outlook: Experts view the tariff cuts as a welcome, albeit temporary, relief. Small and medium-sized businesses on both sides are expected to benefit from eased supply chain pressures and reduced import costs. However, analysts warn that without a permanent deal, uncertainty could resurface once the 90-day period expires.
Geopolitical Angle: Beyond trade, the deal includes joint U.S.-China diplomatic efforts to stabilize tensions in South Asia, including calls for a ceasefire between India and Pakistan. This broader cooperation suggests a strategic shift toward global stability.
Next Steps: Negotiators from both countries are scheduled to meet again in mid-June to assess progress. While this agreement marks a significant cooling of hostilities, much work remains to fully resolve the deeper trade and political disputes.