China, US Slash Trade Tariffs in 90-Day Deal

China and the U.S. have agreed to pause their reciprocal tariffs for 90 days, with both sides bringing their rates down by 115 percentage points, U.S. Treasury Secretary Scott Bessent said following talks in Switzerland.

The move reduces the tariffs imposed on Chinese goods by President Donald Trump to 30 percent, and those imposed on U.S. goods by Beijing to 10 percent. They will continue negotiations during the pause.

Why It Matters

The reduction of tariffs could be a major step toward resolving the trade conflict between the world's two largest economies, one that deeply unsettled global markets and raised fears of a recession and higher inflation.

The agreement also arrives on the back of a U.S. deal on trade with the U.K., which the Trump Administration has said is the first of many to come amid multiple negotiations taking place, and is another sign that the worst may be over on tariffs.

What To Know

"We had very robust discussions, both sides showed great respect," Bessent said at a briefing on Monday morning after the weekend's high-level meetings in Geneva with a Chinese delegation led by Vice Premier He Lifeng.

The U.S. tariff on Chinese imports reflects a 10 percent baseline and a 20 percent tariff related to China's role in the fentanyl trade. It is down from a combined 145 percent. China had previously mirrored the reciprocal rate up to 125 percent.

U.S. Trade Representative Jamieson Greer, who joined Bessent in the talks, said other preexisting tariffs remain in place. He also said China had removed its retaliatory countermeasures against the U.S.

Greer said the U.S. and China had agreed to work together on tackling fentanyl, a highly potent synthetic opioid that is a leading cause of drug deaths in the U.S.

Trump's reciprocal tariffs were intended to reflect the trade barriers he said the U.S. faced from its trading partners. He wanted to use tariffs to protect American businesses from unfair competition or prize open global markets to them.

He views the U.S. goods trade deficit—when imports exceed exports—as evidence the country is being treated unfairly. He has accused China of being especially abusive to the U.S. on trade.

"We concluded that we have shared interests and we both have an interest in balanced trade. The U.S. will continue moving towards that," Bessent said at the briefing.

The trade war exploded when Trump introduced his reciprocal tariffs on April 2, sparking a series of escalatory retaliations by each side. But both China and the U.S. have acknowledged that the situation was unsustainable, leading to the talks in Geneva.

U.S. Futures Markets Surge

The markets for U.S. futures surged on the news of a China tariff pause.

The NASDAQ 100 Future was up 3.79 percent, the S&P Mid Cap 400 rose 2.73 percent, and the S&P 500 Mini was up 2.74 percent, at the time of writing.

Daniel Ives, managing director and senior equity research analyst at Wedbush, called the tariffs pause a "dream scenario" after hopes of a de-escalation leading into the weekend.

"With US/China clearly on an accelerated path for a broader deal we believe new highs for the market and tech stocks are now on the table in 2025 as investors will likely focus on the next steps in these trade discussions which will happen over the coming months," Ives said in a research note.

Ives also said that while there has been damage to the economy and supply chains since Trump's tariffs in April, the latest reductions "take a recession off the table for now in our view."

What People Are Saying

A spokesperson for the Chinese commerce ministry said, per state news agency Xinhua: "It is hoped that the U.S. side will continue to work with China on the basis of this meeting, thoroughly correct the erroneous practice of unilateral tax increases, continuously strengthen mutually beneficial cooperation, maintain the healthy, stable and sustainable development of China-U.S. economic and trade relations, and jointly inject more certainty and stability into the world economy."

What Happens Next

In many ways, the hard work for the negotiators begins now. Agreeing to a deeper and more complex deal between the U.S. and China that resolves the many disputes on trade and other related issues, such as fentanyl, is a difficult task.

But the tariffs pause gives 90 days of space for officials to do this work, and in an environment where much of the political heat has been taken out of the situation.

Further trade agreements like that struck with the U.K. are expected to be announced in the coming days, with the Trump administration touting substantial progress in some discussions.