U.S. and China agree to slash most tariffs for 90 days
The Associated Press | Posted: May 12, 2025 9:03 AM | Last Updated: 18 hours ago
Sides will continue to negotiate after having temporarily set tariffs over 100%
U.S. and Chinese officials said Monday they had reached a deal to roll back most of their recent tariffs and call a 90-day truce in their trade war for more talks on resolving their trade disputes.
Stock markets rose sharply as the globe's two major economic powers took a step back from a clash that has unsettled the global economy.
U.S. Trade Representative Jamieson Greer said the U.S. agreed to drop its 145 per cent tariff rate on Chinese goods by 115 percentage points to 30 per cent, while China agreed to lower its rate on U.S. goods by the same amount to 10 per cent.
Greer and Treasury Secretary Scott Bessent announced the tariff reductions at a news conference in Geneva. Bessent said at the news briefing after two days of talks that the high tariff levels would have amounted to a complete blockage of each side's goods, an outcome neither side wants.
"The consensus from both delegations this weekend is neither side wants a decoupling," Bessent said.
Trump, in response to a reporter at the White House on Monday, said tariffs would "go up substantially higher," though not to 145 per cent, if a comprehensive deal isn't reached within 90 days. He expressed confidence a deal would be struck in that timeframe.
Trump said the reduced tariff rates didn't apply to tariffs on autos, steel and aluminum or the potentially upcoming import taxes on pharmaceutical drugs.
China's Commerce Ministry said the two sides agreed to cancel 91 per cent in tariffs on each other's goods and suspend another 24 per cent in tariffs for 90 days, bringing the total reduction to 115 percentage points.
The Ministry called the agreement an important step for the resolution of the two countries' differences and said it lays the foundation for further co-operation. It said it hopes the U.S. will stop "the erroneous practice of unilateral tariff hikes."
LISTEN l Politico international trade reporter Daniel Desrochers on the critical talks:
Markets react positively
There was no mention from either side of the de minimis exception. Trump signed an executive order on April 2 to end the exemption — a rule that allows small packages worth less than $800 US to enter the U.S. tax free — for packages from China and Hong Kong. Companies like Shein and Temu, both of which were founded in China, have used the rule to their advantage, shipping orders to the U.S. as individual packages rather than grouping them in larger shipping crates.
But as trade envoys from the world's two biggest economies blinked, finding ways to pull back from potentially massive disruptions to world trade and their own markets, investors rejoiced.
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Jens Eskelund, president of the European Union Chamber of Commerce in China, welcomed the news but expressed caution. The tariffs only were suspended for 90 days and there is great uncertainty over what lies ahead, he said in a statement.
"Businesses need predictability to maintain normal operations and make investment decisions. The chamber therefore hopes to see both sides continue to engage in dialogue to resolve differences, and avoid taking measures that will disrupt global trade and result in collateral damage for those caught in the crossfire," Eskelund said.
Trump last month raised U.S. tariffs on China to a combined 145 per cent and China retaliated by hitting American imports with a 125 per cent levy. Tariffs that high essentially amount to the two countries boycotting each other's products, disrupting trade that last year topped $660 billion.
The Trump administration has imposed tariffs on countries worldwide, but its fight with China has been the most intense. Trump's import taxes on goods from China include a 20 per cent charge meant to pressure Beijing into doing more to stop the flow of the synthetic opioid fentanyl into the United States. The remaining 125 per cent involve a dispute dating back to Trump's first term and comes atop tariffs he levied on China then, which means the total tariffs on some Chinese goods can exceed 145 per cent.