US and Chinese officials said Monday they reached a contract that rolls back most of the recent tariffs and called for a 90-day ceasefire in the trade war for further consultations to resolve the trade dispute.
Stock markets rose sharply as Grove’s two major economic forces stepped back from the conflict that destabilized the global economy.
US trade representative Jamieson Greer said the US agreed to lower the 145% tariff rate on Chinese goods by 30% to 115 percentage points, but China agreed to lower the US goods rate by 10% to the same amount.
Greer and Treasury Secretary Scott Bescent announced the tariff cuts at a press conference in Geneva.
US Trade Representative Jamieson Greer, left, and US Treasury Secretary Scott Bessent attended a press conference on Monday, May 12, 2025 in Geneva, Switzerland, after a two-day closure door discussion on trade between the US and China.
The two officials hit a positive tone as they said they had set up consultations to continue discussing trade issues. Bessent said in a news briefing after two days of consultations that high tariff levels would result in a complete blockage of each camp’s goods.
“The consensus from both delegations this weekend is that neither side wants decoupling,” Bescent said. “And what happened with these very high tariffs… was an embargo, and it amounted to an embargo. Neither side wants that. We want trade.”
“We want a more balanced trade, and I think both sides are committed to achieving that.”
The delegation met for at least a dozen hours on both weekends at a 17th-century villa burned on Sunday, which escorts the town, protected by Swiss police scores and serves as the official residence of the Swiss ambassador of the United Nations in Geneva.
Sometimes, delegation leaders separated from staff and settled on the couch on the villa’s patio overlooking Lake Geneva, helping to deepen their personal connections to reach a highly popular deal.
China’s Commerce Ministry said the two agreed to cancel 91% on tariffs on each other’s goods and suspend an additional 24% on 90-day tariffs, bringing the total cut to 115% points.
The ministry called the agreement an important step towards resolving differences between the two countries and said it would lay the foundation for further cooperation.
“This initiative is consistent with the expectations of producers and consumers in both countries and contributes to the interests of both countries and the common interests of the world,” the Ministry’s statement said.
China hopes that the US will stop “misconducting unilateral tariff hikes” and work with China to protect the development of economic and trade relations and inject certainty and stability into the global economy, the ministry said.
A joint statement issued by the two countries said China has agreed to suspend or remove other measures taken since April 2 in response to US tariffs.
China has increased rare earth export controls, including those important to the defense industry, added more American companies to export controls and unreliable entities lists, restricting business and restricting them in China.
The full impact on the complex tariffs and other trade penalties enacted by Washington and Beijing remains unknown. It also depends heavily on finding ways to fill the differences over the years during the 90-day suspension.
However, investors were delighted as trade envoys from the world’s two biggest economies blink, found a way to pull back from global trade and potentially massive disruptions into their own markets.
The S&P 500 futures rose 2.6%, while the Dow Jones industrial average rose 2%. Oil prices skyrocketed over $1.60 per barrel, with the US dollar gained against the euro and Japanese yen.
“It’s a substantial de-expansion,” said Mark Williams, Chief Asian Economist at Capital Economics. However, he warned, “There is no guarantee that a 90-day ceasefire will give way to a permanent ceasefire.”
Jens Eskelund, chairman of China’s European Union Chamber of Commerce, welcomed the news but expressed his caution. Tariffs have been suspended for only 90 days, and there is great uncertainty about what’s ahead, he said in a statement.
“Companies need predictability to maintain normal operations and make investment decisions. Therefore, the Chamber of Commerce wants both parties to continue to engage in dialogue to resolve differences and avoid taking measures that disrupt global trade and cause collateral damage to those caught up in crossfire,” Eskelund said.
Last month, Trump raised US tariffs to 145% total, while China retaliated by hitting US imports with 125% collection. High tariffs existed essentially in both countries boycotting each other’s products, disrupting trade that last year exceeded $660 billion.
An announcement by the US and China has resulted in a surge in stocks, with US futures jumping by more than 2%. Hong Kong’s Hangsen index surged by nearly 3%, while Germany and France’s benchmarks rose by 0.7%
The Trump administration has imposed tariffs on countries around the world, but the fight against China was the most intense. Trump’s import tax on goods from China includes a 20% claim aimed at pressure Beijing to do more to stop the flow of synthetic opioid fentanyl to the US.
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MacHugh contributed from Krtenbach from Frankfurt, Germany, Mito in Japan, and Moritug in Beijing.
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