U.S. and China Agree to 90-Day Trade War Pause as Trump Announces Major Reset

Introduction

In a significant development in international trade relations, President Donald Trump declared a “total reset” in U.S.-China relations following the agreement of a 90-day pause in their ongoing trade war. This temporary cessation of hostilities, announced on May 12, 2025, marks a pivotal shift in the economic dynamics between the world’s two largest economies.

Details of the Agreement

The agreement stipulates a substantial reduction in tariffs:China Briefing+6France 24+6MarketWatch+6

• U.S. Tariffs on Chinese Imports: Reduced from 145% to 30%.The Atlantic+3Vogue Business+3MarketWatch+3

• Chinese Tariffs on U.S. Goods: Reduced from 125% to 10%.Vogue Business+1MarketWatch+1

These adjustments are set to remain in effect until August 10, 2025, providing a window for further negotiations and potential long-term solutions.MarketWatch+9Vogue Business+9AP News+9

Market Reactions

The announcement has had a profound impact on global financial markets:MarketWatch+1Investor’s Business Daily+1

• U.S. Stock Market Surge: The Dow Jones Industrial Average soared by over 1,000 points, reflecting investor optimism.Investor’s Business Daily+1MarketWatch+1

• Commodity Prices: Oil prices experienced a 4% increase, while gold prices fell by $115, indicating shifting investor sentiments.MarketWatch

These market movements underscore the significant economic implications of the trade truce.China Briefing+1AP News+1

Implications for Businesses

While the truce offers immediate relief to businesses affected by the trade war, uncertainties persist:Vogue Business

• Short-Term Relief: Companies dependent on Chinese imports, such as game makers and furniture designers, have expressed cautious optimism.AP News

• Ongoing Concerns: Despite the tariff reductions, the remaining 30% U.S. tariff and potential future uncertainties continue to pose challenges for long-term planning.MarketWatch+2Vogue Business+2AP News+2

Industry experts emphasize the need for a comprehensive and stable long-term trade policy to enable predictable business planning and mitigate further disruptions.Vogue Business+1AP News+1

Strategic Considerations

The truce provides an opportunity for both nations to address longstanding issues:China Briefing

• Supply Chain Resilience: The pause allows for a reassessment of supply chain strategies, particularly in industries exposed during the COVID-19 pandemic.MarketWatch

• Addressing Non-Tariff Barriers: Both sides have agreed to engage in discussions to resolve non-tariff trade barriers, including issues related to fentanyl exports.The Irish Times+1MarketWatch+1

These discussions could pave the way for a more sustainable and mutually beneficial economic relationship.MarketWatch

Conclusion

The 90-day trade truce between the U.S. and China represents a significant step toward de-escalating tensions and resetting bilateral relations. While challenges remain, the agreement offers a platform for constructive dialogue and potential long-term solutions. The coming months will be crucial in determining the trajectory of U.S.-China economic relations.China Briefing