The 90-Day Tariff Agreement: How China and the US Plan to Ease Trade Tensions

In a surprising move that could reshape the global trade landscape—if only temporarily—China and the United States have reached a 90-day tariff agreement. 

Designed as a cooling-off period, the deal offers a pause in the escalating economic standoff between the world’s two largest economies. While it signals diplomatic progress, its provisional nature means long-term uncertainty remains.

Understanding the 90-Day Tariff Truce Between China and the US

The agreement, forged during recent high-level talks in Geneva, enacts a temporary reduction in tariffs imposed over the past year of trade tensions. The goal is to stabilize markets and allow room for further negotiation.

• US Tariffs on Chinese Goods: Slashed from a peak of 145% to 30%, with a 20% duty on fentanyl-related goods still in place.
  
   
• Chinese Tariffs on US Goods: Cut from 125% down to 10%, covering a wide range of imported items.
  
   
• The reductions are not permanent and remain under review, with both countries reserving the right to reinstate duties after the 90-day window.

Read more: Trump Plans New Tariff Policy!

Global Markets Rally After the Announcement

Investor sentiment turned sharply positive following news of the tariff rollback, signaling hope that economic diplomacy may still prevail.

• The Nasdaq surged 4.1%, leading the gains across major US indices.
  
   
• The S&P 500 climbed 3.1%, while the Dow Jones Industrial Average rose 2.7%.
  
   
• International markets responded in kind, with Hong Kong’s Hang Seng Index jumping over 3%, and gains echoed across Europe and Asia.
  
   

This bounce reflects renewed optimism among investors, even if many acknowledge the fragility of the truce.

Read more: Will China's Tariff from the US Be 245%? A Closer Look at the Latest Trade War Talk

What the Tariff Reduction Means for Businesses and Consumers

The implications of the deal extend beyond financial markets to supply chains, operating costs, and retail pricing.

For Businesses: SMEs in both countries stand to benefit most, as they have borne the brunt of retaliatory duties. The tariff pause may help restore order volumes and ease sourcing strategies.

For Consumers: Prices on many imported goods—from cars and electronics to everyday household products—remain elevated, but the deal could help prevent further increases.

For Logistics Firms: Shipping volumes from China to the US had declined since early April, but the deal may stabilize transit flows and improve predictability in freight operations.

Read more: Is the US Becoming More Profitable?

Geopolitical Motives: Economic Realignment, Not Full Reconciliation

Despite the headline optimism, both nations are positioning strategically, rather than moving toward full-scale rapprochement.

• US Perspective: Treasury Secretary Scott Bessent reiterated America’s goal of “strategic decoupling” in sectors like semiconductors, pharmaceuticals, and steel—signaling the US is not seeking a wholesale return to previous trade norms.
  
   
• China’s Viewpoint: Officials in Beijing called the truce a “constructive step”, though they remain critical of what they describe as Washington’s “unilateral” trade behavior.
  
   

This underscores that while tariffs may ease temporarily, the broader divergence in economic philosophies remains unresolved.

Read  more: US Tariff Uncertainties Slow Market's Growth

What Comes After the 90 Days?

The short-term reprieve serves as a political and economic testing ground. What happens next will depend on continued diplomacy—and underlying power dynamics.

• Future Negotiations: Both sides are expected to resume talks before the 90-day term expires, potentially transforming this temporary deal into a more lasting accord.
  
   
• Sectoral Talks: Separate discussions on fentanyl control and strategic technology transfers are progressing in parallel.
  
   
• Investor Watchpoints: Markets will be watching closely for signs of either entrenchment or further compromise.

Read  more: Trump's New Tariff Stance on China: Will the Market Withstand the Pressure?

Conclusion

The 90-day US-China tariff agreement is a calculated de-escalation, not a resolution. 

It offers short-term market stability and operational relief for businesses but maintains the ambiguity that has defined recent economic relations. 

For now, the world watches as Washington and Beijing test the boundaries of cooperation—and confrontation.

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FAQ

1. What is the 90-day tariff agreement between China and the US?

It’s a temporary truce in which both countries agreed to reduce most trade war tariffs for 90 days to allow time for further negotiations. It is not a permanent resolution.

2. What tariffs were reduced under the agreement?

The US cut tariffs on Chinese goods from 145% to 30%, while China lowered its retaliatory tariffs from 125% to 10%. Some duties—like those tied to fentanyl control—remain unchanged.

3. Will this agreement lower prices for consumers?

It may help prevent further price increases, but overall tariffs remain above pre-trade war levels, so consumers are unlikely to see significant price drops in the short term.

4. Why is the agreement only 90 days long?

The 90-day window acts as a provisional period for evaluating progress in negotiations. Both sides can reinstate tariffs if talks stall or fail.

5. What does this mean for long-term US-China trade relations?

It signals willingness to talk but does not suggest full normalization. Core issues—like tech dominance, IP protection, and industrial policy—remain deeply contentious.