The United States and China agreed on May 12 to a 90-day pause on reciprocal tariffs, with both countries slashing tariff rates by 115 percentage points, marking a significant step toward de-escalating trade tensions. Following high-level talks in Geneva, the US announced it will reduce tariffs on Chinese goods from 145 per cent to 30 per cent, while China will lower tariffs on US goods from 125 per cent to 10 per cent, effective May 14.
The temporary truce has drawn a wide spectrum of reactions. Global markets showed cautious optimism, with major retailers like Walmart and Target welcoming the decision, hoping it will ease cost pressures and supply chain disruptions. Port authorities and logistics firms also expressed hope for a rebound in trade flows.
US Treasury Secretary Scott Bessent said the discussions were ‘robust and productive,’ adding that both sides are committed to avoiding economic decoupling. A joint statement confirmed the creation of a mechanism for continued trade dialogue.
The announcement triggered strong market reactions. US stock futures rallied, with the S&P 500 up 1.6 per cent and Nasdaq 100 gaining 2 per cent, while gold fell 1.6 per cent. The Hang Seng Index in Hong Kong was poised for its best run in a year, and crude oil prices also surged. The dollar strengthened as Treasury yields climbed and expectations of interest rate cuts receded.
US Trade Representative Jamieson Greer emphasized that the Geneva deal marks a breakthrough in reducing trade deficits and stabilizing supply chains. Financial markets welcomed the move, easing fears of prolonged economic disruption. Analysts called it a clear shift toward risk-on sentiment.
However, economists cautioned the tariff rollback is temporary and further negotiations are needed. Zhiwei Zhang of Pinpoint Asset Management called it “a very good starting point,” but warned that a permanent resolution will take months.
This was the first in-person meeting of top economic officials since Trump launched the tariff standoff.
