Politics
US-China Tariff Deal: Agreement to Slash Tariffs Lifts Dollar
US-China tariff deal
U.S. and China Agree to Slash Tariffs in Major Breakthrough
GENEVA, May 12 – In a significant step toward easing tensions, the United States and China have reached a temporary agreement to cut mutual tariffs, offering hope for an end to the trade war that has rattled global markets and raised fears of an economic slowdown.
Following high-level discussions in Geneva, U.S. Treasury Secretary Scott Bessent confirmed that both sides had agreed to reduce tariffs to a 10% baseline for the next 90 days. This move represents a dramatic rollback from previously steep rates—over 100 percentage points higher—and is seen as a sign that both countries are looking for a path forward that avoids further conflict.
“Both sides stood firm on their national interests, but the shared goal is balanced trade,” Bessent said. “The U.S. will continue to move in that direction.”
Financial markets reacted positively. The dollar strengthened against other major currencies, and investor sentiment improved following the news. Wall Street futures climbed as optimism grew that the agreement might stave off a global recession.( global tariff blitz,)
Bessent spoke alongside U.S. Trade Representative Jamieson Greer, noting that the weekend talks showed both countries had no interest in decoupling their economies. “These extreme tariff levels acted almost like an embargo,” he said. “But we all want trade—not division.”
This was the first time senior U.S. and Chinese economic officials had met face-to-face since President Trump returned to office and resumed his aggressive tariff strategy. Since January, the U.S. had raised tariffs on Chinese imports to 145%, escalating an already tense trade environment. In response, China imposed its own duties of up to 125% and restricted exports of key rare earth materials vital to U.S. industries.
The impact was severe: nearly $600 billion in bilateral trade was disrupted, affecting global supply chains and triggering layoffs across sectors.
However, the new agreement marks a turning point. Analysts like Zhiwei Zhang of Pinpoint Asset Management called the outcome “better than expected,” noting the potential for short-term relief to global supply chains and economic stability.
After the talks, U.S. officials emphasized the deal’s potential to reduce the trade deficit, while Chinese officials acknowledged “substantial progress” and announced plans for a new economic dialogue platform.
President Trump, speaking before the talks concluded, described the negotiations as a “total reset” carried out in a “friendly, but constructive, manner.”
While discussions over fentanyl imports—another key issue for the U.S.—were handled separately, both sides reported productive engagement on that front as well.
Chinese Vice Premier He Lifeng echoed the cautious optimism, recognizing the progress made during the meetings, which took place in a private villa overlooking Lake Geneva.
Summary
- Geneva talks mark first high-level US-China meeting since Trump’s return
- Trade war halted $600 billion in bilateral trade, sparking stagflation fears
- New economic dialogue forum agreed by US and China post-talks