US and China Announce Dramatic Tariff Reductions, Dropping More than 100%

The United States and China have reached a surprise agreement to significantly reduce tariffs on each other’s goods for an initial period of 90 days, easing tensions in a long-running trade war that has rattled global markets and strained diplomatic relations. The agreement was announced in a joint statement Monday following a weekend of intense negotiations in Geneva between officials from the world’s two largest economies. Both sides cited “substantial progress” and emphasized their commitment to building a “sustainable, long-term, and mutually beneficial” trade relationship. Under the deal, the US will lower its overall tariffs on Chinese imports from 145% to 30%, while China will reduce its tariffs on US goods from 125% to 10%. The revisions are set to take effect by Wednesday, May 14. However, not all levies will be affected. Tariffs related to fentanyl imposed by the US in February and March — totaling 20% — will remain in place. The two nations also agreed to establish a formal mechanism to continue trade discussions. This working group will be co-led by Chinese Vice Premier He Lifeng, US Treasury Secretary Scott Bessent, and US Trade Representative Jamieson Greer. Talks will alternate between the US, China, or other agreed locations, with provisions for working-level consultations on key issues. At a press conference in Geneva, Bessent stressed that both countries were committed to avoiding further economic decoupling. “The consensus from both delegations is neither side wants to be decoupled. We do want trade — and more balanced trade,” he said. Global markets responded positively to the announcement. US stock futures surged, with Dow futures up more than 2%, S&P 500 futures rising nearly 3%, and Nasdaq futures climbing over 3.5% during the Asian trading session. In Asia, Hong Kong’s Hang Seng index jumped more than 3%.