The United States and China reached a deal on Monday to suspend heavy tariffs against each other’s imports for 90 days.
The recent breakthrough marked a detente in the tariff war launched by US President Donald Trump since he returned to office in January. While Trump initially unveiled tariffs against most countries, he then paused most of them – except against China, the US’s biggest economic rival.
Tit-for-tat tariffs that the US and China imposed on each other had snowballed into heavy duties, as high as 145 percent on Chinese goods looking to enter the US, and 125 percent on US products looking to access the Chinese market.
On Monday, Trump said he could speak with his Chinese counterpart Xi Jinping by the end of the week, adding that the economic negotiations had led to a “reset” between the two countries.
What did China and the US say?
The US and China released a joint statement on Monday announcing the suspension of tariffs.
The suspension came after two days of trade talks in Geneva, Switzerland. In recent weeks, Trump had repeatedly said tariff talks with China were under way, but officials in Beijing had denied any ongoing negotiations before the meetings in Geneva.
In the statement on Monday, the two countries said they recognise the importance of their “bilateral economic and trade relationship” as well as the importance of a “sustainable, long-term, and mutually beneficial economic and trade relationship”.
The statement said both nations would take steps to suspend most tariffs by Wednesday.
What are the specific terms of the tariff reductions?
The US brought down the tariff on Chinese goods from 145 percent to 30 percent, while China brought down the tariff on the US from 125 percent to 10 percent.
On April 2, the US had imposed a “reciprocal tariff” of 34 percent on Chinese goods, on top of 20 percent tariffs that Trump had previously imposed on Chinese products since starting his current term. Those earlier tariffs were driven by Trump’s accusation that China was to blame for the fentanyl crisis that has ravaged thousands of American lives and led to several deaths in the US.
In effect, on April 2, Chinese goods were tariffed at 54 percent.
Beijing hit back with a 34 percent tariff on imports from the US. What followed was a tit-for-tat escalation, where the US and China kept hiking tariffs against each other. At the end, the US had imposed a 145 percent tariff on China while China had imposed a 125 percent tariff on the US.
On May 12, they both agreed to slash all tariffs imposed on April 2 and subsequently to 10 percent. But if pre-April 2 tariffs are accounted for, Chinese goods still face a 30 percent tariff. Additionally, specific products from China, such as electric vehicles, steel and aluminium, are subject to even higher, separate tariffs imposed in recent years.
All the tariff suspensions are only for 90 days as of now – subject to review based on broader trade negotiations between the US and China.
What is the main goal of this 90-day suspension?
The US and China agreed, per their joint statement, to establish a mechanism to continue talking about their trade relations.
“This move is significant primarily because it reflects a strategic retreat by the US, rather than a genuine shift in the broader trajectory of US-China relations,” Carlos Lopes, a Chatham House associate fellow for the Africa Programme, told Al Jazeera.
Lopes, whose areas of expertise include international trade and China, explained that the rolling back of tariffs underscores that China held its ground, compelling the US to revise its approach. “In that sense, the rollback signals the limits of grandstanding and unilateralism in a deeply interconnected global economy. It’s a tactical pause, not a strategic realignment.”
Why did Trump revise his tariff approach?
“The reversal is a recognition of domestic economic pressures,” Lopes said.
He added that the tariffs were raising prices for American consumers and undermining key manufacturing sectors, particularly those reliant on Chinese intermediate goods.
“The US economy, despite its scale, cannot isolate itself from global supply chains without serious collateral damage. Moreover, President Trump thrives on projecting strength through negotiation – but bargaining without structure or a clear endgame eventually reveals weakness. The rollback reflects this internal contradiction,” he said.
Fentanyl – and China’s role in the supply chain of the deadly synthetic opioid – was never the major factor behind Trump’s tariffs against Beijing, Lopes said.
“Fentanyl was part of the public discourse but not a fundamental driver of the tariff decision. It served more as a symbolic issue for political messaging, particularly to domestic audiences. The core dynamics at play here are structural – supply chain interdependence, inflationary concerns, and electoral calculations – not drug policy,” the Chatham House analyst said.
What mechanisms have been established to ensure this works?
In the statement, both countries named representatives for negotiations.
Vice Premier of the State Council He Lifeng has been named to represent China. US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer have been named to represent the US.
How have global markets responded to this agreement?
The Monday announcement caused stocks and the dollar to see a surge. On Tuesday, the S&P 500 gained 184.28 points, the Dow Jones Industrial Average gained 1,161 points and the Nasdaq composite gained 779.43 points.
The euro went down by 1.5 percent at $1.1078. The yen weakened and the US currency shot up 2.1 percent at 148.49.
In the wake of Trump’s tariff threats, global markets had seen a considerable fall.
US-China trade: Deeper challenges
The world’s two largest economies, the US and China, have both long competed for economic preeminence and relied on each other as major trading partners.
The US is China’s largest export market, constituting 12.9 percent of Chinese exports in 2023, according to the Observatory of Economic Complexity (OEC).
China is the US’s third-largest export market, behind Canada and Mexico. Chinese goods made up 14.8 percent of the US’s total imports in 2023.
That trade provides US consumers with affordable products and allows US companies to earn billions of dollars annually from sales in China.
China gains billions of dollars in exports and millions of jobs from this trade relationship. Analysts at the US financial services company Goldman Sachs estimated that if the US continued its trade war with China, up to 16 million jobs in China could be at risk.
But, in the US, there have also been growing calls for a reevaluation of that economic relationship. During his first term, Trump waged a “trade war” on China, seeking to balance the trade deficit the US had with the country. In 2024, the US had a $295.4bn trade deficit with China – the largest trade deficit than any trading partner.
While the Chinese leadership has consistently argued that the trade war does not benefit anyone, former US President Joe Biden continued several of Trump’s tariffs and added to them.
Other concerns about the trade relationship flagged by analysts, including at the Council on Foreign Relations, include worries of manufacturing job losses in the US and fears of Chinese espionage and intellectual property theft.
As a result, successive US administrations have increased the scrutiny of exports to China to prevent sensitive US technology from reaching the Chinese military.
The US Congress passed a law in 2018 allowing the president to control US exports that were perceived as “dual-use”, that is, which could be used for commercial or military purposes. China is widely viewed as a primary target of this law.
