In a significant step back from the trade tensions, the U.S. and China have agreed to substantially decrease tariffs imposed on each other for an initial 90-day period. This marks a major breakthrough in the trade dispute between the world’s two largest economies.
Effective Wednesday, May 14, both nations will implement a 115% reduction in tariffs on each other’s goods for the initial 90-day timeframe, according to U.S. Treasury Secretary Scott Bessent. This effectively lowers U.S. tariffs on Chinese exports to 30%, while Chinese tariffs on American goods will decrease to 10%.
The higher U.S. rate is due to tariffs implemented in February and March, which President Donald Trump stated were in response to the flow of fentanyl, and will remain in effect.
Bessent noted that both sides demonstrated “great respect” during lengthy negotiations that led to the breakthrough, adding that “neither side wants a decoupling.”
A spokesperson for China’s Ministry of Commerce stated that Beijing hopes the U.S. will “continue to cooperate with China in the same direction, completely rectify the incorrect practice of unilateral tariff increases, and continuously strengthen mutually beneficial cooperation.”
The trade war has negatively impacted , and the U.S. has experienced a decline in since 2022.
Following the announcement of the tariff pause, markets responded positively on Monday. Hong Kong’s Hang Seng index during Asian afternoon trading, while U.S. stock futures .
In a statement released by the White House, both the U.S. and China affirmed their commitment to ongoing discussions in the coming days. “The two sides may hold working-level consultations on relevant economic and trade issues,” the statement read.
Bessent will represent the U.S., while He Lifeng, Vice Premier of the State Council, is slated to represent China in these future meetings.
This 90-day suspension represents the most significant reduction to date in the ongoing trade war involving the U.S. and other countries.
Charlier Cornes, a senior economist at the Center for Economics and Business Research, told TIME that Monday’s pause “confirms that the U.S. is still willing to negotiate tariff arrangements” but cautioned that rates remain higher than before .
One week later, on Apr. 9, Trump announced a . Subsequently, both countries imposed retaliatory tariffs, resulting in unprecedented U.S. tariffs of 145% on Chinese goods and a reciprocal rate of 125% from China.
