After years of economic friction, the US and China Reach Tariff Deal After Years of Tension to ease tariffs and reset their trade relationship. The announcement, made on May 12, 2025, marks a major shift in one of the biggest economic rivalries of our time.
The deal comes after years of back-and-forth. The US had placed heavy tariffs on hundreds of Chinese goods starting in 2018. China hit back with its own penalties. At one point, tariffs reached as high as 145 percent on Chinese imports and 125 percent on US exports.
What’s in the Agreement?
Both sides made some big moves:
- The US will lower tariffs on Chinese goods to 30 percent
- China will cut tariffs on American goods to 10 percent
- A 90-day pause will stop either country from adding new trade restrictions
- A new dialogue forum will keep talks going and cover more issues like fentanyl control
This isn’t a final resolution, but it’s the clearest sign yet that both sides want to move forward.
Markets Respond
Investors wasted no time reacting. US stock futures shot up:
- S&P 500 futures climbed 2.6 percent
- Dow futures rose 2 percent
Oil prices jumped too. Brent crude reached $65.55 per barrel while US crude rose to $62.68. The dollar also strengthened as traders grew more confident in the US outlook.
Who Wins?
Both countries needed this. US farmers and manufacturers have pushed for relief from rising costs and lost export markets. Chinese companies have felt the squeeze from a cooling global economy and weakening demand.
“This gives both economies some breathing room,” said Paul Beckett, a senior analyst at Oxford Global Advisors. “But there’s still a long way to go.”
The agreement doesn’t cover issues like intellectual property, subsidies or tech transfers, which have been sticking points for years.
What’s Next?
The 90-day pause gives both sides a chance to negotiate further. If they can build on this progress, we might see more tariff cuts and maybe even a broader deal covering investment, tech and environmental rules.
The new dialogue forum is expected to meet soon, setting the stage for deeper discussions.
Final Thoughts
This agreement won’t fix everything, but it’s a step in the right direction. The trade war caused pain on both sides. If the US and China can keep the momentum going, it could mean more stability for global trade.
Now, all eyes are on what comes next.
Sources
- Reuters – US and China reach deal to slash tariffs
- AP News – World shares and US futures advance
- The Guardian – Business live updates on US-China trade deal
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