In a surprising but hopeful turn, the United States and China have agreed to ease tariffs on each other’s products, taking a much-needed pause in the tense trade relationship between the two global powerhouses. The 90-day “cool-off” period, announced in a joint statement on Monday (May 12) from Geneva, gives both sides a chance to find common ground without further escalating their long-standing dispute.
For everyday people and businesses affected by the back-and-forth, this move could bring some short-term relief. The U.S. will cut its combined 145% tariff on most Chinese goods down to 30%, and China will slash its 125% duties on U.S. products to 10% by May 14. Even products related to the critical fentanyl trade will see tariff adjustments.
“This isn’t about severing ties,” said U.S. Treasury Secretary Scott Bessent. “Neither side wants to decouple. We had honest and meaningful discussions, especially about tackling fentanyl imports, and we may even see China make new purchasing commitments as part of this.”
Bessent also clarified that these changes don’t impact tariffs the U.S. applies universally or those that were implemented during the Trump administration.
Financial markets welcomed the news. Asian and European stocks rose, the S&P 500 futures gained 3%, oil prices ticked up, and the dollar strengthened. Even the offshore yuan made a notable gain against the dollar, rising about 0.5%.
Both countries have agreed to set up a mechanism to keep economic and trade conversations going. China emphasized its commitment to mutual respect in dealing with the U.S., saying through its Xinhua News Agency that threats and pressure tactics are not the way forward.
This move marks a hopeful step toward ending a trade war that has weighed heavily on global trade and investor confidence. Talks in recent weeks have shown what officials call “substantial progress,” helping markets stabilize after years of uncertainty since former President Trump’s aggressive tariff announcements in 2018.
U.S. Trade Representative Jamieson Greer noted, “We’re aiming for more balanced trade, and it was clear the Chinese came ready to make progress.”
Still, both sides are treading carefully. While the White House referred to this as a “trade deal,” there are still major questions about what a final agreement might look like and how long it will take to get there. History has shown how fragile these negotiations can be—what seems like progress today could easily unravel tomorrow.
The last attempt at such an agreement—the “Phase One” deal in 2020—ultimately fell short. Now, with a new opportunity on the table, the world watches to see if the two giants can truly find a lasting solution.
