Tariff Truce SHOCKS Markets!

In a stunning turn, the U.S. and China have agreed to a 90-day tariff rollback, easing trade tensions and igniting global market rallies.

At a Glance

U.S. tariffs on Chinese goods reduced from 145% to 30%

China cuts tariffs on U.S. imports from 125% to 10%

Agreement includes suspension of recent non-tariff barriers

Dow Jones surges over 1,000 points on the news

Further negotiations planned to solidify long-term trade relations

Geneva Breakthrough

On May 12, 2025, following intensive negotiations in Geneva, the United States and China announced a significant de-escalation in their ongoing trade war. Both nations agreed to a 90-day period during which reciprocal tariffs would be substantially reduced, aiming to foster a more stable economic relationship.

Under the terms of the agreement, the U.S. will lower tariffs on Chinese imports from 145% to 30%, while China will reduce its tariffs on U.S. goods from 125% to 10%. This mutual reduction marks a critical step in reopening economic dialogue and signals potential for a lasting trade resolution (Reuters).

Watch a report: US and China agree to major tariff rollbacks in 90-day trade truce – CNBC.

Market Response

The announcement of the tariff reductions had an immediate and positive impact on global financial markets. U.S. stock indices surged, with the Dow Jones Industrial Average climbing more than 1,000 points, and the S&P 500 and Nasdaq rising 2.6% and 3.4%, respectively. European and Asian markets also experienced significant gains, reflecting increased investor confidence (CNBC).

Strategists from Deutsche Bank expressed that the recent deal is “better than expected,” highlighting their positive outlook on the negotiations and their outcomes. Additionally, Tai Hui, the chief market strategist at J.P. Morgan Asset Management, noted that the extent of the tariff cuts associated with the deal “even exceeds our constructive expectations.” This shows that market analysts are pleasantly surprised by the developments, suggesting a potentially favorable impact on economic conditions and trade relationships moving forward.

Road Ahead

Despite the optimism, the 90-day window is considered brief for cementing a broader agreement. However, the breakthrough sustains momentum for continued negotiations, which are expected to resume later this month. Talks will be led by Chinese Vice Premier He Lifeng and U.S. Trade Representative Jamieson Greer, focusing on long-term tariff structures, intellectual property protections, and trade balances.

While temporary, the pact suggests a pivot toward compromise and renewed cooperation. If sustained, the rollback could reshape the global trade landscape and potentially mark the end of a prolonged and costly economic standoff.