US and China Reach Tariff Reduction Agreement

On May 12, 2025, the US and China announced in Geneva that they’d suspend certain tariffs on each other’s goods for 90 days, marking the first major breakthrough in bilateral trade relations since 2018.

Triggered by escalating trade frictions, the deal sees the US suspending a 24% tariff on Chinese goods and canceling multiple recent tariffs, notably slashing high rates on Chinese photovoltaic products. China will reciprocate by suspending its 24% tariff on US goods and lifting some non - tariff measures, cutting US firms’ export costs. While both sides retain the right to impose a remaining 10% tariff, a key factor in future talks.

The global market reacted positively: A - share export - related sectors rallied, US stocks rose, the RMB appreciated, and safe - haven assets declined. Tariff - affected industries like photovoltaics, semiconductors, and consumer electronics stand to gain, potentially reshaping global supply chains.

Despite easing trade tensions, tech - sector competition persists. The US seeks more market access in finance and tech, while China pushes back against sanctions and defends its export policies. The US aims to reshape supply chains via “friend - shoring,” but China’s influence through RCEP and expanding RMB oil settlement challenges this.

This 90 - day period is a crucial window for easing relations yet also a tense bargaining stage. Smooth talks may extend the tariff suspension; disagreements could spark new conflicts. The deal brings stability but underlying tech and supply chain disputes remain. Investors should monitor Sino - US negotiations, as finding a balance between competition and cooperation will define the future of global economic order.