The United States and China have agreed to a 90-day rollback of tariffs on each other’s goods, signaling a temporary pause in the trade war that has strained global markets.

The announcement came Monday after intense weekend negotiations in Geneva, where delegations made significant progress in resolving longstanding disputes.

Under the agreement, effective May 14, the U.S. will reduce tariffs on Chinese goods from 145% to 30%, while China will lower levies on American imports from 125% to 10%. U.S. tariffs of 20% related to fentanyl, imposed earlier this year, will remain unchanged. The deal slashes reciprocal tariffs by 115 percentage points, easing costs for businesses and consumers on both sides.

Global markets reacted swiftly, with Dow futures climbing over 2%, S&P 500 futures up nearly 3%, and Nasdaq futures gaining 3.5%. Asian markets also rallied, with Hong Kong’s Hang Seng Index rising more than 3%. Analysts say the move reduces fears of recession, supply chain disruptions, and economic decoupling.

The trade war has taken a toll on both nations. The U.S. reported its first quarterly GDP contraction since 2022, driven partly by tariff-related pressures, while China’s exports to the U.S. have slumped, with factory activity contracting sharply in April.

To sustain progress, both countries will establish a bilateral dialogue led by Chinese Vice Premier He Lifeng, U.S. Treasury Secretary Scott Bessent, and U.S. Trade Representative Jamieson Greer. “Neither side wants decoupling,” Bessent said at a press briefing. “We want balanced trade.”

While the rollback is temporary, officials on both sides hailed it as a step toward diplomacy. China’s Commerce Ministry called it “an important step” for equal-footed dialogue, expressing hope for broader cooperation. Further talks are planned, potentially hosted in the U.S., China, or third-party nations.

The agreement marks the first significant de-escalation since the U.S. initiated aggressive tariffs under President Donald Trump, offering a cautiously optimistic outlook for global trade stability. (ILKHA)