The United States and China, the world’s two largest economies, have reached a major deal to pause their fierce trade war that has shaken businesses, jobs, and markets around the world. This trade fight started when US President Donald Trump raised taxes, called tariffs, on goods imported from China. China quickly hit back with its own high taxes on American products. These back-and-forth moves made many everyday items more expensive and created worries about jobs and inflation in both countries.
Recently, both nations decided to hit the pause button. After long talks in Geneva, they agreed to lower these tariffs for the next 90 days. US Treasury Secretary Scott Bessent announced that both sides would cut down their taxes on each other’s goods by 115%, easing tensions and giving both countries breathing room to negotiate without further harm.
Before this deal, the US had slapped a heavy 125% tax on Chinese goods. China responded in kind, which only made things worse for companies and shoppers. Now, with the new deal, China will reduce its tax on US products to 10%, while the US will lower its duty on Chinese goods to 30%. However, a 20% tariff, which Trump had added earlier over concerns about China’s role in the US fentanyl crisis, will still remain in place.
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US Trade Representative Jamieson Greer said China’s retaliation had been disproportionate and had almost amounted to a trade embargo. But after this latest deal, Greer noted that both sides showed great respect in the negotiations, which many hope will cool down the heated standoff.
Signs of Relief Across Markets
This 90-day pause is already bringing some relief. Stock markets in Europe jumped as soon as the news came out. Germany’s DAX index rose by 1.5%, with big carmakers like Mercedes-Benz and BMW seeing their shares climb. France’s CAC index also went up by 1.2%. Investors felt more confident knowing that the world’s two biggest economies are stepping back from the edge, at least for now.
In China, the local currency, the yuan, rose to its highest value in six months. This was a clear sign that traders and businesses felt better about the situation. Experts had warned that up to 16 million jobs in China were at risk because of the trade war. In the US, people were facing higher prices and empty store shelves because of the costly tariffs on Chinese imports, which supply many everyday goods Americans buy.
William Xin, chair of the hedge fund Spring Mountain Pu Jiang Investment Management, said the result “far exceeds market expectations.” He noted that markets had been fragile and just hoping that talks would resume — but now with this deal, stocks and the yuan are likely to stay strong for a while.
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The positive reaction shows how deeply connected the two countries are. When they fight, the whole world feels the impact. But when they cooperate, even for a short time, businesses and consumers everywhere can breathe a little easier.
A Deal With Respect but Still Fragile
Officials from both sides said that the talks in Switzerland were held with mutual respect and understanding. Secretary Bessent said he was impressed by the level of Chinese engagement, especially on sensitive issues like the fentanyl crisis. “For the first time the Chinese side understood the magnitude of what is happening in the US,” Bessent noted after the talks.
China’s commerce ministry also stated that the agreement meets the expectations of producers and consumers in both nations. They expressed hope that the US would continue this path and eventually roll back more of the taxes that had built up during the trade battle.
However, experts urged caution. They say this deal was a surprising success but warned it doesn’t solve the deeper problems between China and the US. Serious differences and frictions could still arise in the future.
For now, though, factories, farmers, shop owners, and everyday people in both countries are hoping that this pause gives everyone a chance to recover from the damage already done.
