After a series of talks in Geneva, the United States and China have reportedly agreed to a 90-day pause in their trade war, with both nations committing to significantly reduce tariff levels. U.S. Treasury Secretary Scott Bessent announced that reciprocal tariff rates would drop by 115 percentage points. China's commerce ministry has stated they will take action by May 14 to suspend or remove non-tariff countermeasures against the U.S. that have been in place since April 2.
While U.S. Trade Representative Jamieson Greer noted constructive conversations regarding fentanyl, he indicated the issue remains unchanged for now. News of this agreement spurred rallies in stocks and the dollar on Monday, signaling increased investor confidence that a full-scale trade war may be avoided. According to Zhiwei Zhang, chief economist at Pinpoint Asset Management, this development is a positive step for both economies and the global economy, though he cautioned that this is just the beginning of a potentially lengthy resolution process.
Tai Hui, APAC chief market strategist at J.P. Morgan Asset Management, noted the significance of the tariff reduction, stating, "The magnitude of this tariff reduction is larger than expected. This reflects both sides recognizing the economic reality that tariffs will hit global growth and negotiation is a better option going forward... The 90-day period may not be sufficient for the two sides to reach a detailed agreement, but it keeps the pressure on the negotiation process." Hui also anticipates a return to "risk-on sentiment" in the near term and a potential easing of pressure on the Federal Reserve to cut rates.
According to a statement released by the Chinese Ministry of Commerce following the Geneva talks, China will cancel 91% of its retaliatory tariffs on U.S. goods, suspend 24% of its 34% retaliatory tariffs for 90 days, and retain the remaining 10%. China will also suspend or cancel non-tariff retaliatory measures against the U.S. The two sides also agreed to establish a consultation mechanism to maintain close communication on their respective economic and trade concerns.
- 90 days: The length of the pause in the trade war.
- 115 percentage points: The reported drop in reciprocal tariff rates.
- May 14: The date by which China committed to taking action on non-tariff countermeasures.
A White House executive order said on May 12 that the U.S. would cut the "de minimis" tariff on China shipments to 54% from 120%, with a flat fee of $100 to remain starting from May 14.
According to Reuters, the container shipping industry is optimistic about the temporary tariff reduction agreement between the United States and China. This agreement is expected to boost bookings from China to the U.S., which have plummeted due to the trade standoff, causing companies like MSC and Cosco to suspend routes.
Hapag-Lloyd anticipates increased bookings from China to the U.S. and may reverse its plan to use smaller ships if demand surges. Maersk is prepared to switch back capacity to the China-to-United States route if customers request it. The Port of Los Angeles, the busiest U.S. seaport, acknowledges that while the tariff reduction is welcome news, the 30% tariffs are still significantly higher than before. Some believe that importers of critical goods may rush in products, while others may adopt a wait-and-see approach due to the 30% tariffs potentially raising prices for shoppers.
In an op-ed published May 13, 2025, by the Hinrich Foundation, Deborah Elms discusses the dramatic U-turn on tariffs between the US and China after a furious weekend of negotiations. The Hinrich Foundation is a philanthropic organization that works to advance mutually beneficial and sustainable global trade. The foundation was founded by Merle Hinrich, who also founded Global Sources.
Elms notes that while this may appear to be a return to the status quo, it illustrates the consequences of rapid, unanticipated policy shifts with real economic consequences. The 90-day pause on the highest levels of tariffs provides an opportunity to reconsider the trade agenda, but the window is too limited.
Since President Trump's return to office in January, Chinese exports have faced three additional types of tariffs: a 20% tariff on all products for fentanyl, a 10% "reciprocal" tariff rate, and sector-specific tariffs. Some of these tariffs are "stacked," meaning they are added to one another. Elms concludes that the economic damage from abrupt policy shifts has been and will be severe, with firms and foreign partners now considering options that would not have been on the table before.
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This is a developing story, and this article will be updated as more information becomes available.
