US and China agree to temporarily slash tariffs in bid to defuse trade war

A worker at a garment factory in Guangzhou, China, on Wednesday, April 9, 2025. In a joint statement, the United States and China said they would suspend their respective tariffs for 90 days and continue negotiations they started this past weekend. (Qilai Shen/The New York Times)

By Daisuke Wakabayashi and Amy Chang Chen

The United States and China said Monday they reached an agreement to temporarily reduce the punishing tariffs they have imposed on each other while they try to defuse the trade war threatening the world’s two largest economies.

In a joint statement, the countries said they would suspend their respective tariffs for 90 days and continue negotiations they started this past weekend. Under the agreement, the United States would reduce the tariff on Chinese imports to 30% from its current 145%, while China would lower its import duty on American goods to 10% from 125%.

“We concluded that we have a shared interest,” said Treasury Secretary Scott Bessent at a news conference in Geneva where U.S. and Chinese officials met over the weekend. “The consensus from both delegations is that neither side wanted a decoupling,” he said.

China said it will suspend or revoke countermeasures adopted in retaliation for escalating tariffs. In early April, the Chinese government had ordered restrictions on the export of rare earth metals and magnets, critical components used by many industries, including automakers, aerospace manufacturers and semiconductor firms.

Bessent said the two countries may discuss purchase agreements of American goods by the Chinese government. Such a deal could help narrow the American trade deficit with China.

The agreement, for now, breaks an impasse that had brought much trade between China and the United States to a halt. Many American businesses had suspended orders, holding out hope that the two countries could strike a deal to lower the tariff rates. Economists have warned that the trade dispute will slow global growth, fuel inflation and create product shortages, potentially tipping the United States into a recession.

Chinese factories also experienced a sharp decline in export orders to the United States, heaping additional pressure on a sluggish economy. Chinese producers looked to expand trade to Southeast Asia and other regions to circumvent the U.S. tariffs.

Bessent said the tariffs had effectively created an embargo, something neither side wanted. The two countries said that ongoing negotiations will involve Bessent; Jamieson Greer, the U.S. trade representative; and He Lifeng, China’s vice premier for economic policy, who led the weekend talks for the Chinese.

In a research note, Mark Williams, chief Asia economist for Capital Economics, said the agreement was “another substantial retreat from the Trump administration’s aggressive stance,” because it does not include any commitments by China on its currency or trade imbalances. He also noted that there is no guarantee that a 90-day truce will give way to a lasting agreement, especially if the United States continues trying to rally other countries to limit trade with China.

While a temporary reprieve from the shockingly high tariffs is cause for celebration for businesses in both countries, the repercussions will linger. Businesses will likely encounter a flood of pent-up demand, leading to soaring transport prices, as companies race to schedule shipments during the 90-day negotiating window to take advantage of the lower tariff rates.

Global markets jumped on the announcement. The benchmark index in Hong Kong surged 3%, about the same amount as S&P 500 stock futures.

Zhiwei Zhang, the president and chief economist of Pinpoint Asset Management, an investment firm in Hong Kong, called the agreement a “good starting point” for both countries.

“From China’s perspective, the outcome of this meeting is a success, as China took a tough stance on the U.S. threat of high tariffs and eventually managed to get the tariffs down significantly without making concessions,” he said.

Bessent and Greer said the two countries had substantive discussions on U.S. demands that Beijing crack down on the trafficking of the chemical ingredients used to make fentanyl. Bessent said the Chinese “understood the magnitude” of the fentanyl crisis in the United States and that there is a “positive path forward.”

President Donald Trump initially added a 20% tariff to Chinese exports, accusing the country of not doing enough to stop the flow of fentanyl to the United States. That punitive tariff remains in place. The 10% “baseline” tariff on nearly every U.S. trading partner, including China, also remains in place.

Greer said the negotiations were underscored by “mutual understanding and mutual respect,” but noted that China was the only country to retaliate against the United States after Trump imposed so-called reciprocal tariffs on dozens of countries last month.