In a major breakthrough, the United States and China—the world’s two largest economies—have agreed to significantly cut tariffs on each other, marking a key step toward ending their prolonged trade war. The 90-day tariff truce was reached following talks in Geneva, where US Treasury Secretary Scott Bessent announced the temporary pause and a new mechanism for continued dialogue.
US-China Trade War Eases with Tariff Reductions
After years of escalating tensions, the US and China have taken a major step back from their trade war. In a deal struck in Switzerland, both countries agreed to slash tariffs to 10%, down from historically high rates exceeding 100%.
Key Points:
- The US has reduced its tariff on Chinese goods from 145% to 30%, with a base rate of 10% now in effect.
- China cut its retaliatory tariffs from 125% to just 10%.
- Sector-specific tariffs (e.g., on cars, steel, and aluminium) remain unchanged.
- A 90-day pause allows time for further negotiations and potential for a long-term agreement.
What Officials Are Saying
US Treasury Secretary Scott Bessent emphasized the importance of “good faith effort” and “constructive dialogue” moving forward. He also pointed out that the US is prioritizing trade deals with allies like the UK and Switzerland, while the EU is progressing more slowly.
US Trade Representative Jamieson Greer highlighted that the new reciprocal 10% tariffs represent a dramatic de-escalation from earlier levels.
What It Means for Business
Retailers had warned the Biden administration that tariffs were straining supply chains and risking product shortages. The new agreement brings relief, but uncertainty remains.
Andrew Wilson, deputy secretary general of the International Chamber of Commerce, said,
“The credibility of the new consultation mechanism will be mission-critical for restoring business confidence.”
Companies are now urging both nations to create a clear roadmap and timeline for long-term negotiations.
Global Impact and Next Steps
This US-China tariff deal follows last week’s trade agreement with the UK, signaling a broader American strategy to rebuild global trade partnerships.
- Switzerland has been fast-tracked in talks.
- EU negotiations are progressing more slowly.
- The 90-day pause is designed to buy time for deeper, structural economic discussions.
If both sides maintain good faith efforts, the temporary deal could pave the way for a permanent resolution.
Final Thoughts
The US-China agreement to slash tariffs is a hopeful sign for global trade, but much depends on the success of ongoing negotiations. Businesses and markets alike will be watching closely as the 90-day window progresses.
