In a significant move aimed at cooling trade tensions, the United States and China have agreed to a 90-day pause on reciprocal tariffs following high-stakes negotiations over the weekend in Geneva. Both nations hailed the temporary truce as a positive step toward resolving a long-standing trade dispute that has shaken global markets and disrupted supply chains.

US President Donald Trump described the outcome as a "total reset" in the two countries' economic relationship. “Yesterday we achieved a total reset with China after productive talks in Geneva,” Trump said in a press statement. He also noted that while progress had been made, certain sectors—specifically cars, steel, and aluminium—remain excluded from the current agreement.

As part of the deal, the United States will reduce its tariff rate on Chinese goods from 145% to 30%, while China will lower its tariffs on US products to 10%, down from 125%. This marks a dramatic de-escalation from the punitive rates both sides had previously imposed during the height of the trade conflict.

Treasury Secretary Scott Bessent emphasized the mutual benefits of the deal. "Both countries represented their national interest very well," Bessent said during a joint briefing with US Trade Representative Jamieson Greer. “We both have an interest in balanced trade, and the US will continue moving towards that.”

The Geneva meetings marked the first face-to-face engagement between senior US and Chinese economic officials since President Trump returned to office earlier this year and reignited trade tensions with sweeping tariff increases. The previous months had seen tariffs rise steeply, bringing nearly $600 billion in bilateral trade to a virtual halt. This standstill contributed to global economic concerns, with some analysts warning of the risk of stagflation and job losses in key sectors.

China responded to US tariff hikes with retaliatory measures of its own, including export restrictions on rare earth materials crucial to American defense and tech industries. Both sides have suffered economic fallout, intensifying the urgency for a compromise.

Although the new agreement is only temporary, with a 90-day window for further negotiations, it has already buoyed investor confidence. Financial markets responded positively on Monday, with Wall Street stock futures rising and the US dollar strengthening against traditional safe-haven currencies.

President Trump cautioned, however, that if a comprehensive deal is not reached within the agreed timeframe, tariffs could again increase—though he assured that a return to the earlier 145% rate is unlikely.

The coming months will be critical as both nations work toward a broader agreement that addresses structural issues in trade, technology transfer, and market access. Until then, the 90-day pause offers a much-needed reprieve for global businesses and investors watching the world’s two largest economies closely.

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