In a significant move to de-escalate ongoing trade tensions, the United States and China have agreed to a temporary 90-day reduction in reciprocal tariffs, following high-level negotiations in Geneva.

Under the agreement, the U.S. will lower tariffs on Chinese imports from 145% to 30%, while China will reduce tariffs on U.S. goods from 125% to 10%. This development has already spurred positive reactions in global financial markets and is seen as a pivotal step toward resolving the prolonged trade dispute between the two economic powerhouses.

The agreement emerged from discussions between U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer with their Chinese counterparts. Both nations have also agreed to establish consultations to address ongoing trade issues during this period.

The announcement had immediate positive effects on global financial markets. U.S. stocks surged, with the Dow Jones Industrial Average climbing 1,092 points (2.6%), the S&P 500 rising 3%, and the Nasdaq jumping 4.1%. The U.S. dollar strengthened, with the euro down 1.2% at $1.1164, and the yen weakening, leaving the U.S. currency up 1.6% at 147.715. Benchmark 10-year U.S. Treasury yields rose 7 basis points to 4.44%.

U.S. Treasury Secretary Scott Bessent emphasized that the previous triple-digit tariffs amounted to "the equivalent of an embargo, and neither side wants that. We do want trade." The Chinese Commerce Ministry described the agreement as an important step toward resolving differences and laying the foundation for further cooperation.

This development marks a significant de-escalation in the trade tensions that have been escalating since early 2025, when the U.S. imposed steep tariffs on Chinese goods, leading to retaliatory measures from China. The rapid agreement suggests that both nations were experiencing economic pressures that necessitated a temporary truce.

The temporary tariff reductions are expected to influence global trade patterns and economic growth. The domestic political pressures in both countries that led to the agreement will likely be explored further. The likelihood of a comprehensive trade deal being reached within the 90-day window remains to be seen. The sustainability of the positive market response and potential long-term effects will also be closely monitored.

This agreement represents a pivotal moment in U.S.-China relations, offering a temporary respite from escalating trade tensions and providing a foundation for future negotiations.