The United States and China have reached a peace agreement by temporarily reducing import tariffs for a 90-day period. This decision was made following a meeting between representatives of both countries in Geneva, Switzerland, aimed at easing the ongoing trade tensions that have persisted recently.

During the negotiations, it was agreed that American goods entering China would now face a 10% tariff, significantly reduced from the previous 125%. Meanwhile, Chinese products imported into the United States would be subjected to a 30% tariff, lowered from the prior rate of 145%.

“We have successfully agreed on a 90-day pause and substantially reduced tariff rates. Both parties have committed to a combined tariff reduction of 115%,” said U.S. Treasury Secretary Scott Bessent, as quoted by CNBC on Wednesday (May 14, 2025).

The 90-day moratorium begins on Wednesday (May 14). Both China and the U.S. stated that they would continue talks on trade and economic policies throughout this period.

The news brought relief to investors. In the U.S., the Nasdaq futures index climbed by 3.7%, the S&P 500 futures rose by 2.7%, and the Dow Jones jumped by over 840 points, or approximately 2%.

Oil prices also surged. Brent crude futures for July delivery, the global benchmark, traded 2.7% higher at US$65.66 per barrel, while U.S. West Texas Intermediate (WTI) crude rose by 2.9% to US$62.81 per barrel during the session.

Mark Williams, Chief Asia Economist at Capital Economics, described the trade truce as a meaningful de-escalation. However, he warned that this agreement does not ensure lasting peace.

“In a situation like this, there is no guarantee that a 90-day truce will lead to a permanent ceasefire,” he noted.

On the other hand, Tai Hui, Chief Market Strategist for APAC at J.P. Morgan Asset Management, commented that the scale of the U.S.-China tariff reductions exceeded expectations. He said this reflects mutual acknowledgment by both sides that tariffs can hinder global economic growth and that negotiations are the best course forward.

“Although 90 days might not be sufficient for both parties to craft a detailed agreement, it still adds momentum to the negotiation process,” Hui stated in a research note.

Hui further mentioned that investors are still awaiting more specific information about other trade-related terms, such as whether China will ease restrictions on rare earth element exports.