US and China strike 90-day trade deal, slash tariffs amid global economic relief

KATHMANDU: The United States and China have reached a temporary trade agreement, announcing a 90-day pause on their escalating trade war that has rattled global markets. The deal, finalized after weekend talks in Geneva, Switzerland, slashes U.S. tariffs on Chinese imports from 145% to 30% and reduces China’s retaliatory tariffs on U.S. goods from 125% to 10%, effective by Wednesday, May 14.

The agreement, hailed by both nations as a step toward a “sustainable, long-term, and mutually beneficial economic relationship,” follows a period of intense trade friction that began in April when President Donald Trump imposed steep tariffs to address the U.S. trade deficit and revive domestic manufacturing.

China responded with countermeasures, including export restrictions on rare earth minerals critical for high-tech industries, effectively halting nearly $600 billion in annual bilateral trade. The truce also sees China lifting these restrictions and shelving anti-dumping probes against U.S. firms, though some pre-April tariffs, including a 20% U.S. fentanyl-related levy, remain.

Global markets reacted positively, with the S&P 500 surging 3.3%, the Nasdaq climbing 4.4%, and Apple stock rising nearly 5% after Trump revealed plans for increased U.S.-based production. The dollar strengthened, while gold prices fell, reflecting eased recession fears. However, analysts remain cautious, noting the deal’s temporary nature. “This is a starting point, not a resolution,” said Sheldon MacDonald, CIO at Marlborough, warning that a 30% tariff still poses growth challenges.

Trump called the agreement a “total reset” of U.S.-China relations, claiming China agreed to “open up” to American businesses, though he provided few specifics. Treasury Secretary Scott Bessent, who led the U.S. delegation alongside Trade Representative Jamieson Greer, emphasized ongoing talks to address strategic supply chain vulnerabilities. Chinese Vice Premier He Lifeng described the negotiations as “candid and constructive,” signaling plans for further discussions in both nations.

Critics, however, question the deal’s long-term impact. Scott Kennedy from the Center for Strategic and International Studies called it a “U.S. retreat,” arguing that China’s Xi Jinping gained leverage through retaliation. Beijing framed the agreement as a victory, with state media and influencers touting it as proof of China’s negotiating strength. Meanwhile, U.S. businesses expressed mixed sentiments—relieved at the tariff rollback but frustrated by lingering uncertainty, with logistics executives anticipating a surge in shipments but potential price hikes.

The deal follows a similar U.S.-UK trade agreement last week, suggesting a shift in Trump’s trade strategy amid weakening economic indicators. Yet, with the U.S. trade deficit with China still nearing $300 billion, and past truces like the 2018-2019 tariff halt failing to yield lasting results, skepticism persists about whether this pause will lead to a permanent resolution or merely delay further tensions.