The United States and China reached a temporary trade agreement early Monday, ending a monthslong tariff standoff that worried global markets.
The 90-day deal will reduce U.S. tariffs on Chinese imports from 145% to 30% and decrease China’s tariffs on American imports from 125% to 10%. America will keep its fentanyl-related levies on China.
Treasury Secretary Scott Bessent announced the deal at a 3 a.m. Eastern time press conference while in Geneva, Switzerland, after the two sides negotiated all weekend. The tariff reduction will go into effect by May 14.
“We concluded that we have a shared interest,” Bessent said. “The consensus from both delegations is that neither side wanted a decoupling.”
The two countries also agreed to “establish a mechanism to continue discussions about economic and trade relations,” which could be conducted in China, the U.S., or a third country.
A White House statement noted the deal was reached because of a reflection “on their recent discussions and believing that continued discussions have the potential to address the concerns of each side in their economic and trade relationship.”
Bessent said on April 22 that he believes “no one thinks the current status quo is sustainable.”
“We have an embargo now on both sides, right?” he said at the time.
The treasury secretary believed the prospect of de-escalation “should give the world, the markets, a sigh of relief.”
Dow Jones Industrial Average futures rose about 2.5% on Monday morning, as well as S&P 500 futures by 3.23% and NASDAQ futures by 4.17%. The market is expected to open in the green with news of a tariff deal with China. The price of gold, which rises when the market is uncertain, fell overnight.
The White House touted the deal as a “Historic Trade Win for the United States.”
“This trade deal is a win for the United States, demonstrating President Trump’s unparalleled expertise in securing deals that benefit the American people,” it said.
President Donald Trump commented on the U.S. economy and his upcoming executive order to reduce prescription drug prices.
“DRUG PRICES TO BE CUT BY 59%, PLUS! Gasoline, Energy, Groceries, and all other costs, DOWN. NO INFLATION!!! LOVE, DJT,” he wrote in a Truth Social post.
He will hold a press conference Monday morning on drug prices, in which he will likely also face tariff-related questions.
The deal was unexpected given the Trump administration’s hard-line stance on China.
Mark Williams, chief Asia economist for Capital Economics, told the New York Times that the agreement was “another substantial retreat from the Trump administration’s aggressive stance” because it does not include any significant concessions from China on trade imbalances. He added that the 90-day pause does not guarantee a deal will be worked out.
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The deal will likely boost both countries’ economies in the short term as consumers no longer have to deal with large fees on buying products from either country.
U.S. GDP contracted in the first quarter of 2025 for the first time since 2022, while Chinese manufacturing activity dropped at a faster rate than in over a year.
