Global stock markets surged on Monday after the United States and China agreed to a temporary 90-day pause in their escalating trade war. The agreement, which includes significant tariff reductions from both sides, sparked optimism in financial markets and marked the first high-level dialogue between the two nations since Donald Trump returned to the U.S. presidency.
Although the deal slashed tariffs from historic highs, it did little to resolve underlying tensions. The long-running dispute had stalled nearly $600 billion in bilateral trade, caused global supply chain disruptions, and raised fears of stagflation across advanced economies.
As part of the temporary accord, the United States will reduce its additional tariffs on Chinese imports—from 145% to 30%—while China will cut its duties on U.S. goods from 125% to 10%. China will also roll back export countermeasures introduced after April 2, including restrictions on rare earth minerals critical to high-tech industries.
The announcement was made following talks in Geneva between U.S. Treasury Secretary Scott Bessent and his Chinese counterparts. Despite the breakthrough, concerns remain over whether this limited agreement can lead to a more permanent resolution.
Temporary Relief, Lingering Questions
The move was welcomed by investors and businesses alike. Wall Street responded with a sharp rally—sending the S&P 500 to its highest level since early March, and the Nasdaq Composite to a two-month high. The dollar strengthened, while gold prices dipped as investors shifted away from safe havens.
Yet the truce did not settle key disputes. President Trump’s demand for tougher Chinese action against fentanyl trafficking, and the wider U.S. trade deficit with China, were not resolved. “They’ve agreed to open China, fully open China,” Trump said at the White House, adding that the deal would be “fantastic for both countries.”
Despite Trump’s optimism, U.S. Treasury Secretary Bessent admitted the structural imbalances would take years to address. China’s state-run media also struck a more conciliatory tone, noting that while Beijing held firm on its core principles, there was “broad space for future cooperation.”
Analysts caution that this may be more of a strategic pause than a meaningful shift. “This is 100% a retreat by the U.S., not a Chinese cave,” said Scott Kennedy of the Center for Strategic and International Studies. He noted that China had only rolled back retaliatory measures, not made new concessions.
Industry Reacts as Uncertainty Persists
Within the United States, reaction to the agreement was mixed. Some manufacturers and small businesses welcomed tariff relief. However, retail executives warned that even reduced tariffs could still drive up consumer prices. “Everyone wants consistency, and that’s been the hard part of this whole thing,” said Mike Abt, co-president of Abt Electronics in Chicago. “It’s so fluid. It’s like a game of Risk.”
Port officials reported that companies may restart shipments to take advantage of the lower rates, but warned that few firms are likely to scale up operations without more clarity.
The agreement excludes exemptions for low-value e-commerce goods, known as the “de minimis” rule, which the Trump administration revoked earlier this month. The 100% tariffs on electric vehicles and 50% tariffs on solar products—imposed during the Biden administration—also remain in effect.
Even so, Monday’s tariff cuts were more significant than expected. Trump had previously proposed increasing tariffs to 80%, creating anxiety among global shippers and manufacturers. The revised rates offer temporary breathing room.
For Scott Bessent, the Geneva deal marked a personal win. A former hedge fund executive, Bessent has championed a more strategic, less combative approach to trade negotiations. “The consensus from both delegations this weekend is neither side wants a decoupling,” he said. “We want more balanced trade.”
Future meetings are expected, though no formal date has been set. Both sides appear willing to continue dialogue, but time is limited. With just 90 days to reach broader consensus, the world will be watching for signs that the two economic powers can move from tactical truce to long-term solution.
