Trade Tensions Ease: US and China Slashing Tariffs to 10%

The United States and China have reached a temporary agreement to lower tariffs for 90 days, potentially alleviating tensions in their ongoing trade conflict. The decision, announced on Monday after talks in Geneva, Switzerland, is set to take effect on Wednesday, providing a brief respite for businesses navigating uncertainty.

As part of the deal, U.S. tariffs on Chinese imports will be reduced to a standard 10%, down from the 145% imposed by President Trump last month. However, existing tariffs related to illicit fentanyl chemicals will remain intact, alongside protective tariffs from Trump’s previous term. New duties on small shipments valued at less than $800 will also continue.

Treasury Secretary Scott Bessent highlighted a productive dialogue between U.S. and Chinese officials, noting a significant discussion on fentanyl trafficking. “The level of Chinese engagement on the fentanyl crisis was a positive surprise,” Bessent remarked, referring to the involvement of high-ranking Chinese officials.

The White House characterized the 90-day pause as a “landmark deal,” aiming to stabilize economic interactions between the two powers. According to a joint statement, China will lower its tariffs on U.S. goods from 125% to 10%, impacting how companies import goods across borders.

Response from the business community has been mixed. Alex Duarte, a senior economist at the Tax Foundation, expressed skepticism about the effectiveness of the deal. “It’s difficult to gauge how businesses should react given the unpredictability of the president’s approach,” he said, highlighting concerns over high remaining rates.

Marcus Noland of the Peterson Institute for International Economics described the current situation as relatively better than previous possibilities. “This is an improvement over potential tariffs that could have halted trade altogether, but it still represents a restrictive environment compared to earlier this year,” Noland explained.

The White House confirmed its commitment to addressing the trade deficit with China, which saw the U.S. importing $295.4 billion more in goods than it exported in 2024. The announced agreement aims to correct these imbalances, promising tangible benefits for American workers and businesses.