After more than a month of tariff escalation that saw tariffs reach record levels (145% for the United States on Chinese products, 125% for China on American products), Washington and Beijing announced a temporary and significant reduction in these taxes on May 12, 2025.

Details of the agreement

This agreement, reached in Geneva after two days of negotiations, aims to defuse a trade war that threatened to paralyze nearly USD 600 billion in bilateral trade and destabilize the global economy.

• The United States lowers its tariffs on most Chinese products from 145% to 30%.
• China reduces its tariffs on American products from 125% to 10%.

This partial suspension of tariffs takes effect by May 14, 2025, for an initial period of 90 days. A consultation mechanism is established to continue economic and trade discussions between the two countries.

Motives and Reactions

Both sides present this de-escalation as a gesture of appeasement, while emphasizing the need to balance trade. U.S. Treasury Secretary Scott Bessent stated that “both countries had defended their national interests very well, and this measure was in the common interest of the world.” On the Chinese side, the Ministry of Commerce welcomed substantial progress in the negotiations and expressed hope for lasting cooperation.

Scope and Limits of the Measure

This 115-percentage-point reduction in customs duties is temporary and conditional on the continuation of negotiations. The 30% US customs duties, including an additional 20% surcharge related to the US accusations against fentanyl trafficking, are imposed.

Financial markets immediately reacted positively to the announcement, a sign of relief in the business community at the prospect of a trade truce.