US and China Reach Temporary Tariff Truce, Easing Global Trade Tensions
Wafric News – May 12, 2025
The United States and China have agreed to sharply reduce mutual tariffs for a 90-day period — a move aimed at cooling down a heated trade dispute that has rattled global markets and strained economic growth on both sides.
The agreement was reached during high-level talks held in Switzerland, marking the first major dialogue between the two economic superpowers since Washington slapped steep import tariffs on Chinese goods under President Donald Trump.
US Treasury Secretary Scott Bessent announced that starting May 14, US tariffs on Chinese imports will be slashed from 145% to 30%, while China will lower its tariffs on US goods from 125% to 10% for the same 90-day window.
“This is not about decoupling,” Bessent said. “The message from both delegations is clear — we want trade, but we want fair, balanced trade that supports both economies.”
Trade War Triggers Reversal
The dramatic escalation in tariffs earlier this year had threatened to freeze bilateral trade. US ports had begun reporting a drop in container traffic from China, while factory activity in key Chinese industrial zones slowed, triggering layoffs and output cuts.
Beijing, increasingly wary of the domestic fallout, described the new deal as “an important step to resolve differences and deepen cooperation.” China’s commerce ministry also noted the agreement lays a foundation for further negotiations.
Though tensions remain, the temporary rollback suggests both governments are eager to avoid long-term economic damage — especially as global investors feared the ongoing tit-for-tat would spark a worldwide slowdown.
Fentanyl Clause and Political Undercurrents
Despite the easing, the US has kept a clause in place targeting China's handling of fentanyl exports, an opioid that has contributed to a public health crisis in the US. Washington hopes to use the leverage of resumed trade to extract stronger commitments from Beijing on the issue.
Still, Bessent characterized the prior tariffs as "the equivalent of an embargo," and stressed that neither side wants to return to that path.
Markets React Positively
News of the breakthrough sent waves of optimism through financial markets. Hong Kong’s Hang Seng Index surged 3% by close of day, while European indices opened higher. Early signals from Wall Street suggest US markets may climb by up to 3% at the open.
Although short-term, the agreement signals that diplomacy between the world’s two largest economies is not off the table. Whether this fragile pause in the trade war turns into a lasting deal will depend on what happens over the next three months.
By WafricNews Desk.
By WafricNews Desk.
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