The US and China signed a contract on Monday to suspend heavy tariffs on each other’s imports for 90 days.
The recent breakthrough marks the deterrent of the tariff war launched by US President Donald Trump since taking office in January. Trump initially announced tariffs on most countries, but he suspended most of them.
The unparalleled tariffs imposed on each other by the US and China have snowballed 145% of Chinese products trying to enter the US, and 125% of US products aiming to access the Chinese market.
On Monday, Trump said he could speak to his Chinese counterpart Xi Jinping by the end of the week, adding that economic negotiations had led to a “reset” between the two countries.
What did China and the US say?
The US and China issued a joint statement on Monday announcing the suspension of tariffs.
The suspension came after two days of trade talks in Geneva, Switzerland. Over the past few weeks, Trump has repeatedly said that a customs talk with China is ongoing, but Beijing officials denied the ongoing negotiations before a meeting in Geneva.
In a statement on Monday, the two countries said they recognize the importance of “bilateral economic and trade relations” and “sustainable, long-term, mutually beneficial economic and trade relations.”
The statement said the two countries will take steps to suspend most tariffs by Wednesday.
What are the specific conditions for tariff reductions?
The US reduced tariffs on Chinese goods from 145% to 30%, while China reduced US tariffs from 125% to 10%.
On April 2, the US imposed a 34% “mutual tariff” on Chinese products, and Trump had imposed on Chinese products in addition to the 20% tariff he had previously imposed on Chinese products since he began his current term. These previous tariffs were driven by Trump’s accusations that China blamed the fentanyl crisis that destroyed the lives of thousands of Americans and caused several deaths in the United States.
In fact, on April 2nd, Chinese products received tariffs at 54%.
Beijing fought back with 34% tariffs on US imports. It was followed by a escalation of Tat, where the US and China continued hiking tariffs with each other. Finally, the US had 145% tariffs on China, while China had 125% tariffs on the US.
On May 12, they both agreed to cut all the tariffs imposed on April 2nd, then to 10%. However, if the prior April tariffs are considered, Chinese products still face 30% tariffs. Furthermore, certain products from China, such as electric vehicles, steel and aluminum, have been subject to even higher and separate tariffs in recent years.
All customs suspensions are only for the current 90 days. It is subject to reviews based on broader trade negotiations between the US and China.
What are the main goals of this 90-day suspension?
The US and China have agreed to establish a mechanism to continue talking about their trade relations in accordance with their joint statement.
“This move is important primarily because it reflects a strategic setback by the US rather than a true change in the broader trajectory of US-China relations,” Carlos Lopez, Chatham House Associate Fellow of the Africa Program, told Al Jazeera.
Rope, which includes international trade and China in the field of expertise, explained that tariff rewinding emphasizes that China holds its position and that it will modify its approach to the US. “In that sense, the rollback illustrates the limitations of grand excellence and unilateralism in a deeply interconnected global economy. It is a tactical pause, not a strategic reorganization.”
Why did Trump correct his tariff approach?
“The reversal is a recognition of economic pressure within the country,” Lopez said.
He added that tariffs will raise prices for American consumers, particularly the major manufacturing sector, which relies on Chinese intermediate goods.
“The US economy, despite its size, cannot be isolated from global supply chains without serious collateral damage. Furthermore, while President Trump thrives by projecting strength through negotiations, negotiations without structure or clear endgames ultimately reveal weaknesses. The rollback reflects this internal contradiction.”
China’s role in the supply chain for fentanyl – and deadly synthetic opioids was not the major factor behind Trump’s tariffs on Beijing, Lopez said.
“Fentanyl was part of the public discourse, but it wasn’t the fundamental driving force behind tariff decisions. It served as a symbolic issue of political message, especially for domestic audiences. The core dynamics here are structural dynamics.
What mechanisms have been established to ensure this?
In a statement, the two countries appointed representatives for the negotiations.
Deputy Prime Minister of the State Council He was appointed to represent China. US Treasury Secretary Scott Bescent and trade representative Jamieson Greer have been appointed to represent the United States.
How did the global market respond to this agreement?
The announcement on Monday brought a surge in stocks and dollars. On Tuesday, the S&P 500 scored 184.28 points, Dow Jones Industrial Arage scored 1,161 points, and Nasdaq Composite scored 779.43 points.
The euro fell 1.5% to $1.1078. The yen weakened, with the US currency rising 2.1% at 148.49.
The global market has seen a significant decline in the wake of Trump’s tariff threat.
US-China trade: deeper challenges
The two world’s largest economies, the United States and China, both have long been competing for economic excellence and have relied on each other as key trading partners.
The US is China’s largest export market, accounting for 12.9% of China’s exports in 2023, according to the Economic Complexity Observatory (OEC).
China is the third largest export market in the United States, after Canada and Mexico. Chinese products account for 14.8% of total US imports in 2023.
This trade provides us with affordable products to consumers, allowing us businesses to make billions of dollars each year from selling in China.
China has acquired billions of dollars of exports and millions of dollars of jobs from this trade relationship. Analysts at US financial services firm Goldman Sachs estimated that if the US continues its trade war with China, up to 16 million jobs could be at risk.
However, there are also increasing calls for a reassessment of its economic ties in the United States. During his first term, Trump was fighting a “trade war” in China, trying to balance the trade deficits the US had. In 2024, the US had a trade deficit of $295.4 billion with China. This is the largest trade deficit of any trading partner.
China’s leaders have consistently argued that the trade war would not benefit anyone, but former US President Joe Biden has continued with some of Trump’s tariffs and added them.
Other concerns about trade relations flagged by analysts, including the Diplomatic Council, include concerns about the manufacture of job losses in the United States and fears of China’s espionage and intellectual property theft.
As a result, successive US administrations have increased scrutiny of exports to China to prevent US sensitive technologies from reaching the Chinese military.
The US Congress passed the law in 2018, allowing the president to control U.S. exports that can be used for “double use,” meaning commercial or military purposes. China is widely regarded as a major target for the law.
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