On May 12, 2025, the United States and China reached a temporary agreement to suspend reciprocal tariffs for 90 days, marking a critical step toward de-escalating long-standing trade tensions between the two global economic powers. Under the terms of the deal, the U.S. agreed to reduce tariffs on Chinese goods from 145% to 30%, while China committed to lowering its tariffs on American products from 125% to 10%.
The agreement was finalized following intensive negotiations in Geneva between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. Both sides described the truce as a “cooling-off period” intended to pave the way for deeper discussions aimed at establishing a more stable and mutually beneficial economic framework.
Market response to the news was immediate and overwhelmingly positive. The Dow Jones Industrial Average jumped by 1,160 points, a 2.8% gain, while the S&P 500 rose 3.3% and the Nasdaq surged by 4.4%, marking the biggest single-day rally since April.
While officials have emphasized that this is a temporary measure, analysts say the breakthrough could signal a turning point in U.S.-China economic relations, which have been strained by years of tariffs, sanctions, and strategic competition. Negotiators on both sides are expected to reconvene before the 90-day deadline to explore a long-term resolution.
