From 145% to 10% – a turning point in the trade war? USA & China agree on a 90-day tariff pause! – Image: Xpert.Digital
Trade war break: USA and China agree on 90-day customs reduction
Geneva negotiations: US and China partially suspend tariffs
Following intensive negotiations in Geneva, the US and China have reached an agreement to temporarily suspend some of their reciprocal tariffs. Both countries will reduce their tariffs to 10 percent for a period of 90 days. This was announced in a joint statement released in Geneva on May 12, 2025. The agreement marks a significant turning point in the escalating trade war between the world's two largest economies, after tariffs had recently reached record highs of 145 percent (US) and 125 percent (China).
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Details of the Geneva agreement
The agreement between the US and China stipulates that the US will suspend 24 percentage points of the additional ad valorem tariff on Chinese goods for an initial period of 90 days, while the remaining 10 percent will remain in place. According to the joint statement, the parties commit to implementing the measures by May 14, 2025. This agreement is the result of two days of intensive talks between high-ranking representatives of both countries, which took place over twelve hours on Saturday and Sunday at the residence of the Swiss ambassador to the United Nations in Geneva.
US Trade Representative Jamieson Greer and US Treasury Secretary Scott Bessent presented the result at a press conference in Geneva. Greer described the talks as “substantial progress” and stated that the agreement would help to resolve the national emergency declared by President Trump regarding the trade deficit with China. Bessent also spoke of “substantial progress” during the negotiations.
Chinese Vice Premier He Lifeng announced that both sides had agreed to a consultation mechanism for trade issues. Establishing such a dialogue is a key component of the agreement, designed to discuss future trade issues between the two countries and defuse potential conflicts early on.
Background to the current customs conflict
The current breakthrough follows months of escalating trade tensions between the US and China. In April 2025, US President Trump implemented a comprehensive tariff strategy that included a flat 10 percent tariff on almost all imports, as well as country-specific "reciprocal" tariffs. While Trump announced a 90-day pause on these additional tariffs for most affected countries, he explicitly exempted China from this measure and even increased tariffs on Chinese goods to a total of 125 percent.
China responded to these measures with its own retaliatory tariffs of 125 percent on US goods. This brought the mutual tariffs to historic highs of 145 percent for Chinese exports to the US and 125 percent for US exports to China. This development significantly disrupted bilateral trade between the two nations, which is worth nearly $600 billion.
The trade dispute also had a noticeable impact on global financial markets. Following Trump's announcement of a tariff pause for most countries (with the exception of China) in April 2025, US stock market indices recorded significant jumps – the Dow Jones rose by almost 3,000 points or 7.87%, the S&P 500 by 9.5%, and the tech-heavy Nasdaq even by 12.2%.
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Reactions and international significance
The Director-General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, welcomed the agreement and expressed her satisfaction with the positive outcome of the trade talks between the US and China. She described the talks as a significant step forward and hopefully a good omen for the future. She added that this was also important for the rest of the world, including the weakest economies.
The agreement comes at a time when the US is also holding talks with other trading partners. The US Commerce Secretary has announced that dozens more trade deals are expected to be presented in the coming weeks. However, the basic 10 percent tariff that the US has imposed on most imports will likely remain in place.
The current agreement between the US and China represents an important step towards easing trade tensions, but it is temporary. The 90-day suspension of tariffs provides both sides with a window of opportunity to negotiate further trade agreements.
Between tariffs and negotiations: 90 days that could change everything
The temporary agreement reached is a positive signal, but it does not yet represent a lasting solution to the trade dispute. The suspension of some tariffs for 90 days gives both sides time for further negotiations on a long-term trading relationship.
Prior to the Geneva talks, US President Trump had already indicated that an 80 percent tariff on Chinese goods "seemed appropriate," thus suggesting for the first time a specific target for a reduction. At the same time, Trump stated on social media that both sides were seeking a "reset... in a friendly but constructive manner."
However, the challenges remain. The US continues to aim to reduce its trade deficit with China, which US figures at $12 trillion. Furthermore, Washington seeks to change what it calls China's "mercantilist" economic model – a transformation that would require politically sensitive reforms within China.
The next three months will show whether this first step can lead to a substantial improvement in trade relations between the two economic superpowers, or whether there is a risk of renewed escalation of the conflict after the deadline expires.
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