In a significant development over the weekend, the United States and China have agreed to a 90-day pause in their escalating trade war, marked by substantial reductions in tariffs on each other’s goods. This agreement was reached after intense negotiations in Geneva. It aims to de-escalate tensions and provide a window for further discussions on long-term trade relations.​

Earlier in 2025, the trade conflict between the U.S. and China intensified dramatically. The U.S. had imposed tariffs as high as 145% on Chinese imports, while China retaliated with tariffs up to 125% on American goods. These tariffs severely disrupted global supply chains, led to increased consumer prices, and caused significant volatility in financial markets.​

The U.S. will lower tariffs on Chinese goods from 145% to 30%, and China will reduce tariffs on U.S. goods from 125% to 10%. ​This exemption is set to last for an initial period of 90 days, during which both parties aim to negotiate a more comprehensive trade agreement.​

The exemption applies to most products, however certain sectors, such as automobiles, steel, aluminum, and pharmaceuticals, will continue to face existing tariffs. ​

China has agreed to suspend or remove non-tariff barriers that were previously imposed on U.S. goods as part of the agreement. ​

Market Reactions

The announcement of the tariff reductions has been met with enthusiasm in global financial markets:​

  • U.S. Stock Markets: The Dow Jones Industrial Average surged by over 950 points, and the Nasdaq Composite rose by approximately 3.6%.
  • Companies heavily reliant on international trade, such as Amazon, Apple, and Caterpillar, experienced significant stock price increases. ​
  • Shipping and Retail Stocks: Firms like ZIM Integrated Shipping saw pre-market gains of 14%, reflecting optimism about increased trade volumes.​

What This Means for the Future

Both China and the United States have expressed a willingness to engage in ongoing discussions to address broader trade issues, including intellectual property rights and market access.​

The 90-day tariff reduction agreement marks a pivotal moment in U.S.–China trade relations. While it provides a temporary reprieve from escalating tensions, the path to a comprehensive and lasting trade agreement remains complex. It will be interesting to see how the countries build a more permanent trade deal.

However, now is the time to order while the reduction is in effect. If you need help with getting your parts made in China, contact us now.