The United States and China have reached a temporary agreement to reduce tariffs, raising hopes of defusing the ongoing trade war between the world’s two largest economies. The deal, announced on Monday, marks a significant step towards easing tensions that have strained both countries and global markets in recent months. Under the agreement, the U.S. will lower tariffs on Chinese imports from 145 percent to 30 percent, while China will reduce its import duty on American goods from 125 percent to 10 percent.
These changes are set to be implemented by May 14, 2025, and will remain in effect for 90 days as negotiations continue. President Donald Trump, speaking from the White House, acknowledged that many tariffs would remain in place as leverage for improving market access for American businesses in China. He also expressed his expectation to talk with Chinese President Xi Jinping soon, although he cautioned that reaching a comprehensive deal may still take time.
Treasury Secretary Scott Bessent stated that the talks with China had been “very productive” and that further discussions with representatives from Beijing are expected soon to work towards a larger agreement.
Temporary tariff deal reached
The joint statement released by both nations affirmed the importance of their economic and trade relationship.
The tariff reductions represent a significant easing of the punitive measures that had been ratcheted up multiple times since the beginning of the trade conflict. Earlier this year, President Trump had raised tariffs on a range of Chinese goods, prompting equivalent retaliatory measures from China, including a 25 percent tariff on cars and a 10 percent tariff on U.S. food and agricultural products. The U.S. goods trade deficit with China was $295.4 billion in 2024, and this agreement aims to address these imbalances while delivering lasting benefits to American workers, farmers, and businesses.
The deal also establishes a mechanism for ongoing discussions about trade and economics between the two nations. Shares of companies reliant on Chinese goods rallied following the announcement, with Tesla jumping nearly 7%, Apple gaining 6%, and several other tech stocks tied to China seeing significant gains. Jeff Kilburg, CEO of KKM Financial, noted that “markets are rallying because investors are surprised with the velocity of the Chinese trade tariff deal progress.”
While the agreement marks progress, experts caution that achieving a final, comprehensive deal will require addressing deeper structural issues in U.S.-China trade relations.
For now, the temporary relief from tariffs offers a breather for businesses and consumers who have felt the pinch of the trade war.
