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US / China Agree to Temporary Tariff Truce Amid Ongoing Trade Talks
May 12, 2025
The United States and China have agreed to a three-month pause on a portion of their mutual retaliatory tariffs, marking a tentative step toward easing tensions between the world's two largest economies.
The temporary rollback, effective Wednesday, May 14, follows two days of closed-door negotiations in Geneva over the weekend. A joint statement released Monday confirmed the breakthrough, which suspends some of the most punishing tariffs imposed during the recent escalation.
Under the agreement, the US will maintain its 10% base tariff on Chinese imports but suspend an additional 24% in levies that had been set to take effect following announcements on April 8-9. In a reciprocal move, China has agreed to reduce its tariffs on US goods to 10%, easing pressure on American exports.
Officials from both sides characterized the move as a "cooling-off period" and committed to further negotiations aimed at addressing long-standing trade imbalances, intellectual property concerns, and structural economic reforms.
"The agreement reflects a willingness to de-escalate, but the hard work is just beginning," said a senior US trade official familiar with the negotiations. Talks are expected to continue through the summer, with both nations pledging to establish a structured mechanism to guide future economic relations.
Analysts note that the temporary tariff truce may provide breathing room for businesses on both sides of the Pacific that have been caught in the crossfire of the trade dispute. US manufacturers and consumers have taken on a cautious sentiment ever since the trade war and tariffs began to ratchet up.
Chinese container ships have essentially been absent at US West Coast Ports and even with the temporary truce, supply chain disruptions from the lack of shipments are expected to reveal in the coming weeks. The shipping gap will also affect outgoing US exports destined for other international ports that are normally loaded on cargo ships after dropping off Chinese imports.
The markets reacted positively to the news, with US stock markets advancing an average of more than 3% on Monday, Crude Oil prices also rose, while the US dollar gained strength against major currencies. North American Ethylene and Propylene prices edged higher on Monday, as did Polyethylene and Polypropylene resins.
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