Breakthrough Deal: U.S. and China Slash Tariffs, Pause Trade War Escalation
Landmark agreement offers 90-day tariff reduction and signals renewed diplomacy between the world’s two largest economies
Switzerland, PUREWILAYAH.COM — In a significant step toward de-escalating a years-long trade war, the United States and China have agreed to substantially reduce tariffs on each other’s goods.
The breakthrough, announced Monday following high-level negotiations in Geneva, is expected to provide much-needed relief to global markets and supply chains.
Under the new agreement, both sides will implement a 90-day freeze on new trade measures and cut existing tariffs from over 100% to as low as 10%.
A New Chapter in U.S.-China Trade Relations
The Geneva talks marked the first in-person negotiations between the two superpowers since President Donald Trump returned to office.
U.S. Treasury Secretary Scott Bessent, speaking alongside U.S. Trade Representative Jamieson Greer, described the deal as a “step toward balanced trade and mutual economic stability.”
“Both countries represented their national interest very well,” Bessent said.
Earlier this year, President Trump reignited his hardline trade stance by raising tariffs on Chinese imports to 145%, citing national security risks and economic imbalances. Beijing responded with retaliatory tariffs of 125% on U.S. goods and export controls on critical rare earth minerals used in defense and technology.
The tit-for-tat escalation had frozen nearly $600 billion in bilateral trade, triggered inflationary pressures, and disrupted jobs across major global sectors.
Details of the Geneva Agreement
According to officials, the new agreement will reduce U.S. tariffs to 30% and Chinese tariffs to 10%—a rollback of 115 percentage points. The two sides also committed to a mechanism for ongoing economic dialogue, shifting the tone from confrontation to cautious cooperation.
China’s Ministry of Commerce hailed the result as “substantial progress” aligned with “the common interest of the world.” Beijing urged Washington to continue dismantling what it called “the wrong practice of unilateral tariff rises.”
WTO Director-General Ngozi Okonjo-Iweala praised the breakthrough, calling it a “significant step forward” and emphasizing its benefits not only for Washington and Beijing but also for “the most vulnerable economies caught in the crossfire.”
Market Response: Optimism Surges
Global markets responded swiftly and positively to the news:
U.S. stock futures rose sharply.
The dollar gained strength against safe-haven currencies.
Chinese equities surged with the yuan hitting a six-month high.
Hong Kong’s Hang Seng Index jumped over 3%, and the Hang Seng Tech Index soared more than 5%. Mainland indices also rallied: the CSI 300 climbed 1.2%, and the Shanghai Composite Index added 0.8%.
In currency markets, the onshore yuan reached 7.2001 per dollar, its strongest level in six months, while the offshore yuan gained more than 0.5%.
“The result far exceeds market expectations,” said William Xin, chairman of Spring Mountain Pu Jiang Investment Management in Shanghai. “Both Chinese stocks and the yuan will be in an upswing for a while.”
Key Sectors Set to Benefit
1. Technology & electronics
High tariffs had severely disrupted US imports of semiconductors, smartphones, and consumer electronics. With duties reduced to 10%, manufacturers like Apple, Dell, and Intel are expected to regain smoother supply chains and lower component costs.
2. Agriculture
American soybean, corn, and pork producers, previously targeted by Chinese tariffs, stand to benefit. Lower duties will reopen export markets, stabilizing prices and restoring lost contracts for US farmers.
3. Automotive
Both US and Chinese automakers are set to gain. Tesla and GM may expand exports to China, while Chinese electric vehicle makers like BYD could regain market access in the US under the new tariff regime.
4. Industrial machinery, equipment
Tariff relief will lower costs for US industries dependent on Chinese-made components, helping firms in construction, energy, and logistics resume operations without inflated supply expenses.
5. Rare earth elements, advanced materials
The rollback may ease China’s export restrictions on rare earths, which are crucial to US aerospace, military, and renewable energy development, though no formal export deal has been announced yet.
6. Consumer goods
US importers of textiles, toys, furniture, and appliances are likely to benefit from reduced prices, possibly passing on savings to consumers amid broader inflation concerns.
What Comes Next?
While the Geneva deal is a pivotal moment, structural issues remain unresolved, including:
Intellectual property rights
Technology transfers
Industrial subsidies
The 90-day window is being viewed as a confidence-building phase toward a more lasting economic framework.
Trade analysts caution that lasting peace will depend on sustained dialogue and mutual concessions, but the current breakthrough marks a rare moment of calm in a long-simmering geopolitical rivalry. (PW)
Source: Al-Mayadeen