In a significant development aimed at easing trade tensions, the United States and China have agreed to a 90-day reduction in reciprocal tariffs. This agreement, reached during high-level discussions in Geneva, marks a pivotal moment in the ongoing trade negotiations between the world’s two largest economies.
Details of the Agreement
Under the terms of the deal, the United States will reduce its tariffs on Chinese imports from 145% to 30%, while China will lower its tariffs on U.S. goods from 125% to 10%. This substantial decrease is intended to provide temporary relief to businesses and consumers affected by the prolonged trade dispute. U.S. Treasury Secretary Scott Bessent emphasized that this reduction is a temporary measure, with more comprehensive negotiations expected in the near future. ([axios.com](https://www.axios.com/2025/05/12/us-china-tariffs-trade-deal-trump?utm_source=openai))
Market Reactions
The announcement has had an immediate and positive impact on global financial markets. In the United States, the S&P 500 surged by 2.7%, the Dow Jones Industrial Average rose by 981 points (2.4%), and the Nasdaq Composite increased by 3.7%. These gains were led by sectors heavily reliant on U.S.-China trade, including technology and retail. Companies such as Amazon and Best Buy saw their stock prices rise by 7.8% and 10.4%, respectively. ([apnews.com](https://apnews.com/article/62fbd84396aaea011c68231363b283de?utm_source=openai))
Asian markets also responded positively. In Hong Kong, the Hang Seng Index jumped 3%, while India’s Sensex rose 3.2%. These increases reflect investor optimism about the potential stabilization of global trade relations. ([apnews.com](https://apnews.com/article/62fbd84396aaea011c68231363b283de?utm_source=openai))
Implications for the Technology Sector
The technology sector, which has been particularly sensitive to trade tensions, stands to benefit significantly from this agreement. Major U.S. tech companies that rely on Chinese manufacturing and markets, such as Apple, Amazon, Tesla, Nvidia, AMD, and Meta, experienced pre-market stock increases ranging from 5% to 6%. Chinese tech exporters like Temu and Alibaba saw their stocks rise nearly 9% in pre-market trading.
This temporary reduction in tariffs is expected to alleviate some of the supply chain disruptions and cost increases that have plagued the tech industry during the trade war. However, industry leaders remain cautious, recognizing that this is a temporary measure and that long-term solutions are necessary to ensure stability.
Broader Economic Impact
Beyond the technology sector, the tariff reduction is anticipated to have a positive effect on various industries and the global economy as a whole. Retailers, in particular, are expected to benefit from reduced import costs, which could lead to lower prices for consumers. Additionally, the agreement may help to stabilize global supply chains that have been disrupted by the trade dispute.
Analysts have expressed cautious optimism about the agreement. Zhiwei Zhang and Kenneth Broux highlighted the unexpectedly positive scope of the deal and its potential benefits for global economies and markets. However, others, like Jan von Gerich, remain skeptical about long-term stability and warn of lingering uncertainties. ([reuters.com](https://www.reuters.com/world/china/view-us-china-agree-cut-tariffs-90-day-pause-2025-05-12/?utm_source=openai))
Future Negotiations and Challenges
While the 90-day tariff reduction provides temporary relief, it is not a final resolution to the trade dispute. Both countries have acknowledged that more challenging negotiations lie ahead. The establishment of a new Geneva mechanism for continued dialogue has been announced, though specific plans for future meetings remain undefined. ([axios.com](https://www.axios.com/2025/05/12/us-china-tariffs-trade-deal-trump?utm_source=openai))
U.S. Treasury Secretary Scott Bessent emphasized the mutual commitment to balanced trade and ruled out further tariff reductions in the near term. He also indicated a desire for future U.S.-China cooperation with reduced American dependency on Chinese manufacturing. ([ft.com](https://www.ft.com/content/92887b83-1b99-4d69-ba70-6bc812e23dbe?utm_source=openai))
Conclusion
The 90-day tariff reduction agreement between the United States and China represents a significant step toward de-escalating trade tensions that have affected global markets and economies. While the immediate market reactions have been positive, the temporary nature of the agreement underscores the need for continued negotiations to achieve a comprehensive and lasting resolution. Stakeholders across various industries will be closely monitoring the progress of these discussions in the coming months.
