TEMPO.CO, Jakarta - The United States and China on Monday, May 12, 2025, agreed to temporarily cut mutual tariffs, marking a key step toward easing a long-running trade war. According to Channel NewsAsia, the move comes as the world’s two largest economies work to resolve tensions that have rattled global markets and dampened economic outlooks.
Following talks with Chinese officials in Geneva, U.S. Treasury Secretary Scott Bessent said both sides had agreed to a 90-day suspension of further tariff actions. As part of the deal, tariffs will be slashed by over 100 percentage points, bringing them down to 10 percent.
"Both countries represented their national interest very well," Bessent said. "We both have an interest in balanced trade, the US will continue moving towards that."
News of the agreement lifted markets and strengthened the dollar, easing fears of a downturn that had escalated in recent weeks amid aggressive tariff hikes ordered by President Donald Trump. The latest decision is aimed at reducing the United States' trade deficit with China.
Appearing alongside U.S. Trade Representative Jamieson Greer, Bessent noted that both delegations had made meaningful headway over the weekend.
"The consensus from both delegations this weekend is neither side wants a decoupling," he said.
"And what had occurred with these very high tariffs ... was the equivalent of an embargo, and neither side wants that. We do want trade."
The Geneva meeting marked the first in-person engagement between senior economic officials from both countries since Trump’s return to office and the subsequent wave of tariffs he imposed on Chinese imports.
Since January, Trump has increased tariffs on Chinese goods to 145 percent, compounding earlier tariffs from both his first term and the Biden administration. In retaliation, Beijing tightened export controls on rare earth elements—crucial to U.S. defense and tech manufacturing—and raised tariffs on American products to 125 percent.
The dispute brought nearly US$600 billion in bilateral trade to a standstill, disrupted supply chains, and fueled concerns over stagnation and job losses.
Markets responded positively to the development, with Wall Street futures rising and investor sentiment improving amid hopes that the global economy might avoid recession.
"This is better than I expected. I thought tariffs would be cut to somewhere around 50 percent," said Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong.
"Obviously, this is very positive news for economies in both countries and for the global economy, and makes investors much less concerned about the damage to global supply chains in the short term," Zhang said.
U.S. officials described the outcome of Sunday’s talks as a “deal” to help shrink the American trade deficit, while Chinese officials hailed an "important consensus" and said both countries would establish a new economic dialogue forum.
President Trump also praised the negotiations, calling them a “total reset... in a friendly, but constructive manner.”
The U.S. had partially imposed tariffs under a national emergency declaration over the trafficking of fentanyl. Greer noted that discussions around the opioid crisis were “very constructive,” though handled separately from the trade talks.
Chinese Vice Premier He Lifeng, though more reserved in his remarks, acknowledged “substantial progress” after the meetings, which took place at the Swiss ambassador’s private villa overlooking Lake Geneva.
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