China and U.S. Call 90-Day Truce in Trump-Era Trade War

In a significant breakthrough aimed at easing global economic tensions, China and the United States have agreed to a 90-day suspension of their intensifying trade war, with both countries pledging to cut reciprocal tariffs by 115%.

Following talks in Geneva, U.S. Treasury Secretary Scott Bessent told reporters that both sides demonstrated “great respect” throughout the negotiations. “The shared view this weekend was clear—neither nation wants a full economic decoupling,” he said.

The temporary tariff reductions apply to the levies first imposed by Donald Trump on April 2, which had grown to 125% on Chinese goods. Beijing responded with similarly aggressive measures, including non-tariff actions such as curbing exports of key minerals critical to U.S. tech manufacturing.

U.S. Trade Representative Jamieson Greer criticized China's response, labeling it "disproportionate" and suggesting it had created an effective embargo between the two largest economies.

Under the new agreement, China will lower tariffs on U.S. products to 10%, while U.S. tariffs on Chinese goods will drop to 30%. However, a 20% duty linked to China’s alleged role in the U.S. fentanyl crisis—imposed before the latest round of trade tensions—will remain in effect.

A Chinese Ministry of Commerce spokesperson welcomed the agreement, saying it aligned with the interests of producers and consumers in both countries and served the broader global economy. “We hope the U.S. continues this direction, reverses harmful unilateral actions, and builds deeper cooperative ties,” the spokesperson added.

News of the truce sent China’s yuan to a six-month high, as markets responded positively to the easing tensions. Up to 16 million jobs in China were reportedly at risk, while the U.S. was facing inflationary pressures and supply chain shortages due to the tariffs.

Bessent also highlighted positive discussions around fentanyl during the Geneva talks, noting that China showed new understanding of the drug crisis’s scale in the U.S.

In a joint statement released Monday, both nations committed to “ongoing collaboration grounded in openness, communication, and mutual respect.”

William Xin, head of hedge fund Spring Mountain Pu Jiang Investment Management, told Reuters: “The outcome far exceeded expectations. Before, the best-case scenario was just getting both sides to the table. Now we have real progress, and that certainty will boost Chinese stocks and the yuan for some time.”

Hu Xijin, former editor of China’s nationalist newspaper Global Times, hailed the recent U.S.-China trade agreement as a “major victory” for Beijing in defending principles of equality and mutual respect. Posting on Weibo, Hu contrasted the deal with the UK-U.S. trade arrangement, which kept a 10% U.S. tariff on British imports while the UK imposed no equivalent response.

Wang Wen, director of the Chongyang Institute for Financial Studies at Renmin University in Beijing, described the outcome as “an unexpected breakthrough” in U.S.-China tariff talks. However, he cautioned that the agreement does not resolve the deeper structural issues in the relationship and warned that tensions and significant disagreements could still emerge moving forward.

Meanwhile, stock markets across Europe reacted positively to the news. Germany’s DAX rose by 1.5%, driven by gains in companies like Mercedes-Benz, Daimler Trucks, and BMW. France’s CAC index also climbed, increasing by 1.2%.