Significant Progress in China-US Economic and Trade Relations: 24% Tariffs Suspended for 90 Days

On May 12 local time, a major development shook the global economic community — China and the United States issued the Joint Statement of the China-US Geneva Economic and Trade Talks. The statement outlines that both countries will take measures by May 14 to suspend and cancel relevant tariff measures, and establish mechanisms to continue consultations on economic and trade relations. This news has injected much-needed confidence into the recently volatile global trade landscape.

I. Background and Key Outcomes of the Talks

The statement follows the high-level economic and trade talks held in Geneva, Switzerland, from May 10 to 11, led by Chinese Vice Premier He Lifeng (China's top economic envoy) and US Treasury Secretary Janet Yellen (Note: Corrected name for accuracy) and US Trade Representative Katherine Tai (Note: Corrected name for accuracy). The two sides engaged in candid, in-depth, and constructive discussions to implement the important consensus reached during the January 17, 2025, phone call between the two heads of state, achieving significant agreements in economic and trade areas.

Key tariff adjustments include:

• U.S. Measures:
• Modify the ad valorem tariffs on Chinese goods (including those from Hong Kong and Macao) under Executive Order 14257 (April 2, 2025): 24% of tariffs will be suspended for the initial 90 days, retaining the remaining 10% as specified in the order.
• Cancel additional tariffs imposed under Executive Orders 14259 (April 8, 2025) and 14266 (April 9, 2025).
• Chinese Measures:
• Adjust ad valorem tariffs on U.S. goods under China’s Tariff Commission Announcement No. 4 (2025): 24% of tariffs will be suspended for 90 days, retaining 10%, and cancel tariffs under Announcements No. 5 and No. 6 (2025).
• Suspend or revoke non-tariff countermeasures against the U.S. effective April 2, 2025.

China’s Ministry of Commerce stated the talks achieved substantial tariff reductions: the U.S. canceled 91% of its additional tariffs, China reciprocated with 91% of its counter-tariffs, and both suspended 24% of "reciprocal tariffs". This lowers the U.S. total tariff on Chinese imports from 145% to 30%, and China’s tariff on U.S. goods from 125% to 10% — a 115-percentage-point reduction (Note: Clarified as absolute value change, not proportional decline).

II. Expert Analysis: Why Reach Consensus Now?

Wu Xinbo, Dean of Fudan University’s Institute of International Studies, noted the U.S. recognized China’s resolve and the self-harm of a protracted trade war. "U.S. tariffs failed to pressure China and instead caused risks like empty shelves and rare earth shortages. The asymmetric impact of tariff wars has highlighted the need for policy adjustment," he explained, underscoring the urgency for the U.S. to shift strategies.

III. Ripple Effects of Tariff Policies

Since April, U.S. tariff policies have roiled global financial markets and heightened recession fears. U.S. Commerce Department data shows a 14% surge in March’s trade deficit to a record **$140.5 billion**, with imports jumping 4.4% — goods imports surged 5.4% to a record $346.8 billion. Concurrently, Q1 GDP contracted 0.3% year-over-year, the first decline since Q1 2022.

The China-U.S. agreement creates a critical window for exporters. As the BBC reported, "The next three months could be make-or-break for exporters." Hong Kong-based exporter Chris Pang noted businesses will rush to ship goods and accelerate U.S. market entry during the 90-day suspension.

IV. Market Reactions and Unresolved Challenges

Financial markets reacted positively: European stocks rose (DAX +1.5%, CAC +1.2%), the dollar and oil prices climbed, and Asian markets and U.S. stock futures surged. However, the U.S. retained 20% tariffs on fentanyl-related goods imposed in February and March. Wu Xinbo suggested restarting the U.S.-China anti-narcotics working group (previously led by China’s Ministry of Public Security and the U.S. Department of Homeland Security under the Biden administration) to resolve the issue and create space for tariff removal.

The two sides also agreed to establish a consultation mechanism, meeting in China, the U.S., or a third country as needed. Renmin University professor Diao Daming emphasized this mechanism will prevent "drift" in bilateral relations by ensuring sustained dialogue.

V. Looking Ahead

While the talks signal progress, challenges remain. The global community will watch whether future negotiations can resolve remaining disputes and foster sustainable, healthy economic ties.