In a rare moment of de-escalation between the world’s two largest economies, the United States and China have agreed to a 90-day truce in their intensifying trade war, easing tensions that have rattled global markets and alarmed businesses worldwide 🌍.
Announced Monday morning in Geneva, the deal includes a major rollback in tariffs — a combined 115 percentage point reduction — and a commitment to continue negotiations during the three-month pause. U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent led the American delegation, while China’s Commerce Ministry described the deal as a “foundation for further cooperation.”
📉 From Trade War to Trade Pause
Just weeks ago, the two nations appeared on the brink of a full-scale economic standoff, slapping tit-for-tat tariffs that reached a staggering 145% on Chinese goods entering the U.S. and 125% on American goods sent to China. That level of trade barrier, Bessent warned, was the “equivalent of an embargo.”
But over the weekend, inside a lakeside 17th-century Swiss villa guarded by heavy police presence, the tone shifted. Delegates huddled for marathon sessions, occasionally retreating to outdoor sofas with a view of Lake Geneva — and slowly, a consensus emerged.
“Neither side wants a decoupling,” Bessent said. “We do want trade — but more balanced trade.”
The result: both nations agreed to cancel 91% of their mutual tariffs and suspend another 24% for the 90-day period, offering breathing room to restart talks and explore deeper solutions.
📊 Markets Soar, But Caution Remains
Investors wasted no time reacting. Futures for the S&P 500 surged 2.6%, while the Dow Jones Industrial Average rose by 2%. Oil prices jumped over $1.60 a barrel, and the dollar strengthened against both the euro and the yen 💹.
International markets joined the rally, with Hong Kong’s Hang Seng Index climbing nearly 3%, and European benchmarks in Germany and France ticking up 0.7%.
“This is a substantial de-escalation,” said Mark Williams, chief Asia economist at Capital Economics. “But there is no guarantee the truce will give way to a lasting ceasefire.”
Indeed, Dani Rodrik, a Harvard economist, was more scathing. He called the truce a superficial fix that leaves key issues unresolved and burdening U.S. consumers with continued high tariffs.
“Trump has obtained absolutely nothing from China for all the chaos he generated. Zilch,” Rodrik posted on Bluesky.
🧠 Beyond the Headlines: What’s at Stake?
The temporary rollback still leaves 30% tariffs on Chinese imports, which analysts say will continue to dampen trade and investment. And the long-standing issues — from intellectual property disputes to China’s export controls on rare earths — remain.
Just last month, China added multiple U.S. companies to its “unreliable entities” list, further escalating tensions. The new truce includes a suspension of those retaliatory measures, though Chinese officials stressed the U.S. must end its “unilateral tariff hikes” permanently to restore long-term stability.
“This initiative aligns with the expectations of producers and consumers in both countries,” said a statement from China’s Commerce Ministry. “It serves the interests of both nations and the common interests of the world.”
🔮 What’s Next?
Bessent confirmed that another high-level summit is planned in the coming weeks to continue talks. But trade watchers warn that both sides have clashed repeatedly in the past — and this detente could collapse without meaningful progress.
“It’s a relief — but not a resolution,” said Eswar Prasad, professor at Cornell University. “Tariffs are down from sky-high to merely high. That still chills trade.”
For now, global markets and business leaders are exhaling. But the real test will come over the next 90 days: can two deeply divided powers turn a truce into a treaty?