From 145% to 10% - turn in the trade war? USA & China agree on a customs break of 90 days!

Published on: May 12, 2025 / update from: May 12, 2025 - Author: Konrad Wolfenstein

From 145% to 10% - turn in the trade war? USA & China agree on a customs break of 90 days! - Image: Xpert.digital

Trade war break: USA and China agree on 90-day customs reduction

Geneva negotiations: USA and China partially expose tariffs

After intensive negotiations in Geneva, the United States and China have reached an agreement on the temporary suspension of part of their mutual tariffs. Both countries will reduce their tariffs to 10 percent for a period of 90 days. This emerges from a joint explanation that was published in Geneva on May 12, 2025. The agreement marks an important turn in the escalating trade war between the two largest economies in the world after the tariffs recently rose to record heights of 145 percent (USA) and 125 percent (China).

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Details of the Geneva agreement

The agreement between the United States and China stipulates that the USA suspend 24 percentage points of the additional value for Chinese goods for a first period of 90 days, while the remaining 10 percent remain. According to the joint statement, the parties undertake to implement the corresponding measures by May 14, 2025. This agreement is the result of two -day intensive discussions between high -ranking representatives of both countries, which took place on Saturday and Sunday a total of over twelve hours in the residence of the Swiss ambassador at the United Nations in Geneva.

US trade officer Jamieson Greer and US Finance Minister Scott Bessent presented the result at a media conference in Geneva. Greer described the talks as “substantial progress” and explained that the agreement would contribute to remedy the national emergency called out by President Trump regarding the trade deficit with China. Besser spoke of “substantial progress” during the negotiations.

The Chinese Vice Prime Minister He Lifeng announced that both sides had agreed a consultation mechanism for trade questions. The establishment of such a dialogue is an important part of the agreement to discuss future trade questions between the two countries and to defuse possible conflicts at an early stage.

History of the current customs conflict

The current breakthrough follows for months of escalating trade voltages between the USA and China. In April 2025, US President Trump implemented a comprehensive customs strategy that included a flat-rate customs of 10 percent to almost all imports and country-specific “reciprocal” tariffs. While Trump announced a 90-day break of this additional tariff for most affected countries, he explicitly took China from this measure and even increased the tariffs to Chinese goods to a total of 125 percent.

China reacted to these measures with its own counter-tariffs of 125 percent to US goods. The mutual tariffs thus reached historical highs of 145 percent for Chinese exports to the USA and 125 percent for US exports to China. This development led to a significant impairment of bilateral trade between the two nations, which includes almost $ 600 billion.

The customs dispute also had a noticeable impact on the global financial markets. After Trump's announcement of a customs break for most countries (with the exception of China) in April 2025, the US stock exchange indices recorded considerable course jumps-the Dow Jones rose by almost 3,000 points or 7.87%, the S&P 500 by 9.5%and the technology-heavy NASDAQ even by 12.2%.

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Reactions and international importance

The boss of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, welcomed the agreement and was “pleased with the positive result” of the trade talks between the USA and China. She described the conversations as a “significant step forward” and hopefully a good omen for the future ”. This is also important for the rest of the world, including the weakest economies.

The agreement is reached at a time when the USA also has talks with other trading partners. US trade minister has announced that dozens of other trade agreements should be presented in the coming weeks. However, the basic 10 percent customs that the United States has raised to most imports will probably remain.

The current agreement between the United States and China is an important step towards defusing the trade voltages, but is limited in time. The suspension of the tariffs for 90 days offers both sides a time window to negotiate further trade agreements.

Between tariffs and negotiations: 90 days that could change everything

The temporary agreement that has now been achieved is a positive signal, but does not yet mean a permanent solution to the trade conflict. The suspension of part of the tariffs for 90 days gives both sides time for further negotiations on a long -term trade relationship.

US President Trump had already indicated talks in advance of the Geneva that an 80 percent duty of Chinese goods appears to be "appropriate", which for the first time indicated a specific goal for a reduction. At the same time, Trump explained on social media that both sides strive for a “reset… in a friendly but constructive way”.

However, the challenges remain. The United States continues to aim to reduce its trade deficit with China, which, according to US information, is $ 12 trillion. Washington also strives for a change of what it describes as a “mercantilistic” economic model of China - a transformation that would require politically sensitive reforms within China.

The next three months will show whether this first step can lead to substantial improvement in trade relationships between the two economic superpowers or whether the conflict is threatened again after the deadline.

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