US, China Agree to Slash Tariffs, Pause Trade War for 90 Days

Morocco World

12-05-2025

Doha – The United States and China reached an agreement Monday to significantly reduce tariffs on each other's goods for 90 days, marking a major de-escalation in their trade war. US Treasury Secretary Scott Bessent announced the deal after weekend negotiations in Geneva, Switzerland.
Under the agreement, the US will cut its tariff on Chinese imports from 145% to 30%, while China will reduce its duties on American goods from 125% to 10%. The pause takes effect Wednesday, May 14.
'We have reached an agreement on a 90-day pause,' Bessent told reporters. 'The consensus from both delegations is that neither side wanted a decoupling.'
The breakthrough comes after both sides held trade talks in Geneva over the weekend, where officials established 'a mechanism to continue discussions about economic and trade relations.' Bessent will represent the US in future negotiations, while Vice Premier He Lifeng will represent China.
Markets responded positively to the news. Hong Kong's Hang Seng index rose sharply by 3.4%, while the UK's FTSE 100 gained 0.7%. Oil prices also increased, with Brent Crude up by 2.8%. US stock futures surged as well, with contracts tied to the Nasdaq expected to rise by 3.3%.
The International Chamber of Commerce called for a clear roadmap for future negotiations under the newly established economic consultation mechanism.
The agreement maintains a 20% component of the US tariff aimed at pressing Beijing to address the fentanyl crisis. Bessent said he was 'positively surprised by the willingness of China to deal with the problem' and noted that Chinese officials 'understood the magnitude' of the fentanyl crisis in the US.
China's commerce ministry confirmed the suspension of 'all tariff countermeasures' taken against the US since April 2. In a statement, the ministry said the move 'meets the expectations of producers and consumers in both countries' and expressed hope that the US would 'continue to work with China' on trade issues.
The tariff reduction comes at a critical time for both economies. Major US retailers previously warned of empty shelves as importers paused shipments due to prohibitively high taxes. Chinese factories experienced a sharp decline in export orders, adding pressure to their already sluggish economy.
While the agreement signals progress, some analysts urge caution in regards to its long-term implications. The deal represents a temporary breakthrough but doesn't resolve the fundamental tensions between the world's two largest economies.
The 90-day timeframe gives both sides an opportunity to address longer-standing issues. These include intellectual property protections, forced technology transfers, and allegations of government subsidies that create unfair advantages.
These complex differences have developed over many years and likely cannot be fully resolved by August, though substantial progress would help ease tensions between Washington and Beijing.
The deal marks the second major trade announcement by the US in the past week, following an agreement reached with the UK on Thursday, demonstrating the Trump administration's willingness to negotiate on tariffs.
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