US-China Trade Deal Brings Major Tariff Cuts—How Markets Reacted
On May 12, 2025, the United States and China reached a high-level trade agreement during talks in Geneva, Switzerland. Under the agreement, both countries agreed to dramatically lower their high tariffs for a limited 90-day period, signaling a major de-escalation in their long-running trade war.
📌 Temporary 90-Day Tariff Reduction Agreement
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The U.S. will lower tariffs on Chinese goods from 145% to 30%, while China will reduce tariffs on U.S. goods from 125% to 10%.
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These measures will apply temporarily for 90 days starting May 12, 2025.
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The agreement is seen as a temporary suspension of high-tariff policies pursued under President Donald Trump’s second administration.
Both sides have agreed to continue negotiations on specific tariff items and permanent trade rules, with the aim of resolving structural conflicts in their economic relationship.
📈 Immediate Response from Global Futures Markets
Following the announcement, U.S. stock index futures rose sharply.
| Index | Surge |
|---|---|
| Dow Jones (US30) | 1.25% ~ 2.4% |
| S&P500 (US500) | 1.38% ~ 3% |
| Nasdaq 100 | 1.53% ~ 3.9% |
Wall Street interpreted the deal as a signal of easing tensions, boosting investor sentiment and pushing up shares in major tech and manufacturing sectors.
⏳ Why the Measures Are Temporary (90 Days)
This agreement is widely seen as a “temporary truce.”
During the 90-day window, both countries plan to hold further talks on core structural issues:
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Item-specific tariff restructuring
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Market access expansion
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Ban on forced technology transfer
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Improved protection of intellectual property
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Sensitive issues like fentanyl, rare earths, etc.
If the talks fail to produce meaningful results, the high tariffs could return and the trade war may resume.
🧠 Impact on Tech Export Restrictions
1. No Immediate Relief on Tech Controls
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The agreement focuses primarily on tariff cuts and conflict de-escalation. It does not include provisions on export restrictions for key technologies such as semiconductors, AI, or telecommunications.
2. Laying the Groundwork for Future Talks
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A framework for economic and trade coordination and ongoing practical dialogue has been established. This opens the door for negotiations on tech-related restrictions in future rounds.
3. Potential for Institutional Reforms in China
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In earlier trade talks, China proposed draft legislation on IP protection and banning forced tech transfers in response to U.S. demands. These reform discussions may resume during this new round of practical talks.
4. Structural Limits of Tech Competition
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U.S.-China tech competition has expanded beyond trade, entering strategic and national security domains.
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The U.S. continues to restrict high-tech exports.
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China responds with rare earth export controls and tighter regulations on U.S. companies.
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🔎 Conclusion
While the agreement doesn’t provide an immediate solution to tech restrictions, it marks a starting point for restoring trust and reopening high-level talks on sensitive economic issues.
📌 Summary
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🇺🇸 U.S.: Tariffs on China cut from 145% → 30% (115%p cut for 90 days)
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🇨🇳 China: Tariffs on U.S. cut from 125% → 10% (115%p cut for 90 days)
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📉 Trade tension de-escalation boosts global stock futures
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🤝 Structural issues on the agenda: tech controls, IP, market access, etc.
This agreement may serve as a critical step toward rebalancing U.S.-China trade relations and reducing global uncertainty.
