In a bold move to ease economic tensions, the U.S. and China have struck a deal to slash crippling tariffs, giving American workers and businesses a much-needed break.
On Monday, trade representatives from both the Trump administration and Beijing agreed to reduce tariffs from a punishing 125% to just 10% for 90 days, starting Wednesday, and this agreement, forged after intense negotiations in Switzerland, signals a rare moment of cooperation between the world’s economic giants, as CNBC reports.
The deal temporarily halts most tariffs on goods traded between the U.S. and China. It follows months of aggressive trade policies, including President Donald Trump’s imposition of tariffs as high as 145% on Chinese imports since January. China retaliated with its own measures, tightening restrictions on rare earth elements critical to American industries.
Negotiations took place over the weekend in Switzerland, where both sides committed to ongoing discussions. The 90-day tariff pause aims to stabilize markets and foster dialogue on broader economic policies. U.S. Treasury Secretary Scott Bessent praised the talks, noting the serene Lake Geneva setting helped create a productive atmosphere.
Financial markets roared in approval of the tariff suspension. Nasdaq futures surged 3.7%, while S&P 500 futures climbed 2.7%. The Dow jumped over 840 points, a 2% gain, reflecting investor confidence in the deal. Global markets also felt the ripple effects. The pan-European Stoxx 600 index rose about 1% during midmorning trading. Brent crude futures for July 2025 spiked 2.7% to $65.66 per barrel, and U.S. West Texas Intermediate futures gained 2.9% to $62.81 per barrel.
The ICE U.S. Dollar Index climbed 1.1% to 101.46, signaling strengthened economic optimism. This market rally underscores the deal’s immediate impact on global trade expectations. American small businesses, often hit hardest by tariff wars, stand to benefit from reduced costs.
Despite the progress, not all tariffs have been lifted. The U.S. will maintain 20% duties on Chinese imports linked to fentanyl, keeping total U.S. tariffs on China at 30%. This carve-out reflects ongoing concerns about national security and public health.
Critics warn the truce may be fragile. Mark Williams, chief Asia economist at Capital Economics, noted that U.S. tariffs on China remain higher than those on other nations. He cautioned that the 90-day window might not lead to a permanent resolution.
Williams also highlighted U.S. efforts to encourage other countries to restrict trade with China. Such moves could complicate future negotiations. The temporary nature of the deal leaves room for uncertainty, as both sides face pressure to deliver lasting results.
The 90-day period is a tight timeline for resolving deep-seated trade disputes. Tai Hui, APAC chief market strategist at J.P. Morgan Asset Management, said the pause reflects both nations’ recognition that tariffs harm global growth. He emphasized that negotiation is the smarter path forward.
However, Hui warned that 90 days may not suffice for a comprehensive agreement. The deadline keeps negotiators focused but raises the stakes for quick progress. American workers and consumers, weary of rising costs, hope for a more permanent solution.
Bessent described the agreement as a significant step, with both sides agreeing to drop reciprocal tariffs by 115%. He credited the calm Swiss setting for fostering productive dialogue. His optimism contrasts with skeptics who fear renewed tensions if talks falter.
This deal offers immediate relief to industries battered by high tariffs. Manufacturers, farmers, and small business owners can expect lower costs on imported goods, boosting competitiveness. The tariff reduction aligns with President Trump’s focus on protecting American jobs while confronting China’s trade practices.
Yet, the U.S. maintains a tougher stance on China than on other trading partners. This approach reflects a commitment to national sovereignty and economic strength, priorities that resonate with working-class Americans. The fentanyl-related tariffs underscore a refusal to compromise on critical issues.
For now, the tariff pause is a victory for common-sense trade policy. It buys time for negotiators to address complex issues without punishing businesses and consumers. As talks continue, Americans will watch closely, hoping for a deal that restores economic stability and puts the nation first.
