The United States and China have agreed to a 90-day pause on reciprocal tariffs and a substantial reduction in existing levies, signalling a marked shift in bilateral economic relations and offering temporary relief to global markets.
The announcement followed two days of intensive negotiations in Geneva involving US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, alongside Chinese Vice Premier Liu He and Commerce Minister Wang Wentao. The outcome, described by both parties as “substantial progress”, provides for a de-escalation of tariff measures imposed over recent months and sets the stage for broader trade discussions.
Bessent confirmed that both sides would “substantially move down” from the tariff levels imposed since April, with an immediate 115% reduction in reciprocal duties. The agreement, which had not been expected to materialise so swiftly, includes a commitment to suspend or eliminate non-tariff measures imposed in retaliation since early April.
Financial markets responded sharply. Wall Street futures surged, with the Nasdaq 100 up 3.6%, S&P 500 futures climbing 2.8%, and the Dow Jones Industrial Average futures rising 2.3%. In Asia, the onshore Chinese yuan reached 7.2001 per dollar, its strongest position since November 2024. Chinese blue-chip shares also gained 0.8% on the news.
“This is better than I expected,” said Zhiwei Zhang, Chief Economist at Pinpoint Asset Management in Hong Kong. “The market was hoping for dialogue. Instead, we have a meaningful tariff rollback and a timetable. This gives breathing space and a platform for negotiations.”
The Geneva breakthrough comes after months of mounting tension between the world’s two largest economies. Washington had raised tariffs on Chinese imports to 145% in April, citing persistent imbalances and unfair practices in high-tech and green energy sectors. Beijing had responded with countermeasures, targeting US agricultural goods, critical minerals, and industrial components.
The three-month pause is intended to give negotiators time to construct a longer-term framework to address structural trade concerns. Both countries committed to further talks before mid-August, with the goal of establishing a formal economic dialogue mechanism aimed at reducing the likelihood of future tariff escalations.
US Trade Representative Jamieson Greer noted that the decision marks the beginning of a “strategic reset” in the trade relationship. “We have a good mechanism to avoid escalations from happening again,” he said at the post-negotiation briefing. Greer also confirmed that discussions on other issues, including the illicit flow of fentanyl, were proceeding separately but constructively.
China’s Ministry of Commerce issued a brief statement confirming its intention to withdraw recent countermeasures and reaffirmed its commitment to stabilising trade relations. “Both sides have agreed to take action by 14 May and resume suspended dialogue platforms,” the ministry said.
Despite the broadly positive tone, analysts cautioned that the agreement remains limited in scope and duration. Kenneth Broux, Senior FX and Rates Strategist at Société Générale in London, said: “This is a strong move for the markets, and the dollar is finally catching up with equities and bond yields. But we still need to see whether this is sustainable beyond 90 days.”
Arne Petimezas, Director of Research at AFS Group in Amsterdam, described the development as a “sharp U-turn” by Washington. “Markets will cheer this, but the question now is how credibly the US can threaten to reinstate tariffs in August after making such a rapid retreat. The credibility of future enforcement is now in doubt.”
The deal appears to have been driven in part by concerns over global economic stability. Disruptions to supply chains and rising input costs had fuelled fears of a broader slowdown. Monday’s joint statement is expected to include provisions on digital trade, green technology transfer, and standards alignment—although details were not immediately disclosed.
Scott Bessent confirmed the White House will revisit the April tariff hikes and consider rolling them back further, potentially to the 60% level initially proposed by President Trump. “We are not yet at a final agreement, but the trajectory is clear,” Bessent said. “We aim to reach a durable solution that serves American workers and restores balance to our trade ties with China.”
The decision has been well received by investors, with Chinese hedge fund chairman William Xin noting that the outcome “far exceeds market expectations”. “This restores confidence. We now have more certainty, and I expect Chinese equities and the yuan to continue rising in the near term,” Xin said.
Further announcements from both sides are expected this week, as technical teams begin drafting the roadmap for the next phase of talks. A follow-up session is anticipated in July, where negotiators will seek to move from temporary tariff relief towards a more comprehensive trade accord.
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