Trump hails ‘total reset’ as US and China slash tariffs in surprise 90-day deal

In a surprising development, the United States and China have agreed to a 90-day deal to greatly lower tariffs on each other’s goods. This is a major step back from their ongoing trade war. The agreement, which was announced two days after negotiations in Geneva, Switzerland, includes large cuts to tariffs set by both countries.

Under the deal, the US will drop its tariffs on Chinese goods from 145% down to 30%, while China will lower its tariffs on US goods from 125% to 10%, according to the BBC. These cuts apply to the tariffs put in place under President Trump’s Liberation Day measures, which had severely hurt trade between the two countries.

The 90-day period starts on May 14, with US tariffs still including an extra 20% charge aimed at stopping the illegal fentanyl trade, per Reuters. The Geneva talks were the first high-level meeting between US and Chinese economic officials since President Trump returned to office. The deal goes further than many analysts expected, showing that both sides are willing to reduce tensions. Both countries said they were pleased with the agreement.

US and China finally easing off tariffs

Beyond the immediate tariff cuts, the deal also sets up a system for continued talks on economic and trade relations. These discussions will be led by US Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng and could cover issues like intellectual property rights, government subsidies, and trade imbalances. The talks may take place in either country or a neutral location, depending on what both sides agree to.

The deal had an immediate positive effect. Stock markets rose after the announcement, with big gains in European and Asian markets, and expectations of a strong opening in US markets. Shipping companies, which had been hit hard by the trade war, also saw big jumps in their stock prices. However, the price of gold, which usually rises when markets are uncertain, fell as confidence improved.

The earlier tariffs had a big economic impact. Financial markets reacted badly to the higher tariffs, causing instability and increasing fears of a possible global recession. Many businesses faced supply chain problems, leading to lower production and job cuts in some industries.

Shipping companies, especially those moving goods between the US and China, reported steep drops in container shipments. At the same time, companies that relied heavily on US-China trade suffered from the tariffs, resulting in reduced output and layoffs. Some industries, however, saw growth due to the more protective trade policies.