US and China agree to cut tariffs, signaling trade war ease

The US and China, in a significant step in the tariff war that threatened to disrupt trade between the world’s two largest economies, have agreed to reduce tariffs for the next 90 days.

Under the agreement reached in Geneva, the US will reduce tariffs on Chinese goods from 145% to 30%, while China will reduce tariffs on goods imported from the US from 125% to 10%. The development was announced on Monday.

US Treasury Secretary Scott Bessent stated on Sunday that “significant progress” was made during two days of trade talks with Chinese officials in Geneva, signaling that Washington and Beijing could begin to de-escalate tensions.

“We will provide details tomorrow, but I can say that the talks were fruitful,” Bessent told reporters after his meetings with Chinese Vice Premier He Lifeng, which were also attended by US Trade Representative Jamieson Greer.

Greer commented, “It is important to understand how quickly we reached an agreement, which perhaps indicates that the differences were not as significant as perceived,” adding that “a lot of groundwork had been done.”

Optimistic statements from the US negotiating team were the first indication that the countries could calm the trade war that had shaken financial markets and caused concerns about global supply chains.

The US applied a 145% tariff on goods from China, and Beijing retaliated with a 125% tariff.

China’s embassy in Washington did not respond to a request for comment regarding China’s stance on the negotiations. The US and Chinese negotiating teams met at the residence of Switzerland’s UN ambassador in Geneva.

After the first day of negotiations on Saturday, Trump wrote on his Truth Social platform that the US and China had made “great progress.” Trump used the phrase, “a friendly but constructively negotiated full reset.”

According to analysts, the China-US talks held over the weekend are not only economically and politically significant for both sides but also mark the beginning of a long-term process to address tariffs and other trade barriers.

This positive step seen in Geneva, Switzerland, will provide both powers with temporary domestic political relief without appearing weak in the trade war.

Matteo Giovannini, a visiting researcher at the Center for China and Globalization, stated, “The US side is under political pressure to show gains.”

“On the other hand, China views the negotiations not as a singular outcome but as a strategic process to manage bilateral competition, economic resilience, and long-term development goals,” said Giovannini, noting that Beijing’s behavior indicated a game plan based on strategic patience and economic self-preservation.

Speaking to the South China Morning Post, Giovannini added, “By building resilience, China aims to protect its domestic economy from external shocks while selectively engaging in global markets.”

Giovannini, who is also a senior financial manager at the Industrial and Commercial Bank of China, emphasized that Trump’s characterization of the Geneva talks as an “agreement” could serve many short-term political purposes.

“This signals progress without making concrete commitments and allows the Trump administration to postpone further tariff increases while appearing strong,” he said. He further added, “This strengthens Trump’s image as a dealmaker by turning the trade issue from a stalemate into an evolving success story.”

Giovannini also noted that bringing a positive outlook to the situation could “calm financial markets or increase business support,” stating that this would give Trump “an advantage in domestic politics and at the negotiating table.”

Stephen Olson, a visiting senior fellow at the ISEAS – Yusof Ishak Institute in Singapore and a former US trade negotiator specializing in the economic impact of US-China competition, stated that the agreement reached on establishing a consultation mechanism was not a trade deal but an agreement to continue negotiations.

Neither side fully disclosed which topics were discussed, but analysts estimate that negotiators addressed potential reductions in tariffs on goods critically needed by one of the parties.

Olson said, “Given the political capital both sides have spent to initiate negotiations and then characterize the talks very positively, the ground appears set for at least a partial tariff reduction and progress on other issues such as fentanyl in the coming weeks and months.”

Brian Wong, a researcher at the Centre for Contemporary China and the World at the University of Hong Kong, said that while the US presented the agreement as a Trumpian success story and “deal,” Beijing’s plan was to focus on strengthening its trade relations with the world.

Rajiv Biswas, CEO of Asia-Pacific Economics, a research firm in Singapore, said that tariff reductions on US exports of oil, gas, and agricultural products to China, along with China’s exports of textiles, apparel, and electrical products to the US, are currently on the table.

Biswas stated that US aircraft manufacturer Boeing could also come up in discussions if both sides discuss whether to restart civil aircraft exports to China.

Biswas, predicting numerous rounds of negotiations stemming from the weekend talks to occur in the coming months, also stated that there would be a long-term “tech war” in the fields of semiconductors, artificial intelligence, and defense technology.

Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at the French investment bank Natixis, said that Chinese exporters are concerned about being forced to close their businesses because tariffs have virtually halted their trade with the US.

Garcia-Herrero described the weekend dialogue as “like a ceasefire.”

“They cannot keep fighting because they do not have the resources for it,” she said.