The US and China have reached a surprise agreement to dramatically lower tariffs, providing a much-needed pause in their escalating trade war. After two days of intense negotiations in Geneva, the US agreed to reduce duties on Chinese goods from 145% to 30%, while China will lower its retaliatory tariffs from 125% to 10%. The announcement sent global stock markets soaring, with the Dow closing up 1,161 points, or 2.81%.
Tech and luxury goods stocks, which are heavily exposed to the Chinese market, saw particularly strong gains. Apple rose 6.3%, Amazon jumped 8.1%, and LVMH surged 7%. Treasury Secretary Scott Bessent, who led the US negotiating team, called the talks tough but respectful.
He emphasized America’s position of strength due to China’s greater need for the US market amidst its economic struggles.
Tariff relief sparks stock market surge
President Donald Trump, who had previously argued for cutting off all trade with China, described the agreement as a necessary pause rather than a significant policy shift.
In Beijing, the deal has been cautiously welcomed, but tensions remain high. President Xi Jinping accused the US of “bullying” and urged it to “stop smearing and shifting blame” for the fentanyl crisis onto China. The 20% gap between the new US and Chinese tariff rates is due to the US maintaining duties linked to these fentanyl accusations, which China denies.
Chinese officials and state media have portrayed the agreement as a validation of Beijing’s negotiating strategy and a victory for its principles. However, some social media users expressed skepticism, with one likening the pause to “changing the ventilator on a dying patient.
The tariff war has taken a heavy toll on Chinese traders and manufacturers, with shipments grinding to a halt. They now join other countries hoping for a more comprehensive long-term agreement before the 90-day pause expires and crushing tariffs snap back into place.
