In a dramatic shift from the combative rhetoric that has defined their recent trade clashes, senior U.S. and Chinese negotiators emerged from back-to-back sessions in Geneva with a landmark interim agreement to temporarily slash reciprocal tariffs. Over two intense days of talks, the world’s two largest economies charted a path toward a 90-day truce, reducing U.S. levies on Chinese goods from 145 percent to 30 percent, and Chinese duties on American imports from 125 percent to 10 percent. Behind this breakthrough lay a carefully choreographed dance of strategic concessions, technical discussions, and high-stakes diplomacy designed to halt an escalating trade war that many feared could tip the global economy into recession.
Setting the Stage: Escalation and Impasse
By early May, tit-for-tat tariffs imposed by both Washington and Beijing had spun out of control. U.S. importers faced an unprecedented 145 percent levy on select Chinese goods—a jump from 34 percent just weeks earlier—while China retaliated with duties as high as 125 percent on U.S. exports ranging from pork to rare earths. Supply-chain snarls, rising input costs, and growing political pressure on both sides created a sense of urgency. Major retailers warned of empty shelves and spiking consumer prices, while Chinese exporters fretted over lost market share in the world’s largest consumer economy. With global markets jittery, President Trump and President Xi Jinping each authorized their economic teams to explore a diplomatic detente.
The venue for this high-stakes diplomacy was an elegant but austere conference center in Geneva, chosen for its neutrality and tradition of facilitating international agreements. Representing the U.S. were Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer, both veterans of previous tariff rounds. China dispatched Vice Premier He Lifeng alongside senior commerce and finance officials. Negotiators from both sides came armed not only with revised tariff schedules but also with binders of data on trade flows, tariff impact studies, and lists of non-tariff barriers.
On the first morning, teams exchanged opening statements underscoring the national stakes: the U.S. lamented the widening trade deficit and risk to American manufacturers; China decried “unilateral tariff hikes” that threatened its export-driven recovery. Officials then retreated to small-group sessions focusing on three key areas: tariff rate adjustments, exclusions for critical sectors, and a mechanism for ongoing dialogue.
Concessions and Counter-Concessions
The heart of the talks revolved around the scale and duration of tariff cuts. U.S. negotiators proposed a phased rollback—first to 50 percent, then further reductions after compliance checks on intellectual property and market access commitments. China countered by insisting on a straight 90-day cut across all contested duties. Weeks of preparatory work on both sides had produced compromise language: a blunt 90-day window during which U.S. rates would drop to 30 percent and Chinese rates to 10 percent, followed by a “review and extension” clause.
Other points of friction included “de minimis” exemptions that the U.S. had rescinded for low-value e-commerce shipments, and Beijing’s non-tariff actions—such as export licensing rules for rare earths and anti-dumping probes—that U.S. firms claimed were equivalent to hidden tariffs. After marathon breakout sessions, negotiators agreed to hold de minimis and non-tariff barrier discussions in parallel working groups, decoupling them from the core tariff truce.
By late Saturday afternoon, negotiators appeared at an impasse over language describing a “joint mechanism” for future talks. Both sides wanted assurances the other would not backtrack—China feared a renewal of “Liberation Day” duties, while the U.S. sought guarantees on Chinese purchases of American goods. In a decisive move, Secretary Bessent agreed to remove three executive orders imposing extra tariffs on select Chinese imports, a gesture that persuaded Beijing to soften its stance on mutual purchases. Minutes later, Vice Premier He Lifeng signaled China’s willingness to lower its duties and suspend export curbs on rare earths for the truce period.
Sunday morning saw a flurry of final edits to the joint statement. The accord spelled out the exact rate cuts, the 90-day duration, and a framework for bi-weekly follow-up meetings between U.S. and Chinese delegations. It also reaffirmed a shared interest in balanced trade and explicitly rejected “decoupling” of the two economies. At 11:15 a.m. Geneva time, both sides announced the agreement to the press, emphasizing that while tariffs remained above pre-April levels, the move represented a “significant de-escalation” and “substantial progress” toward a comprehensive settlement.
Financial markets rallied on the news: U.S. stock futures leapt, the dollar strengthened against major currencies, and oil prices climbed on expectations of smoother supply chains. European exporters, who had suffered collateral damage from the U.S.-China standoff, also saw share prices rebound sharply. Politically, the deal offered breathing room for both administrations. President Trump, facing criticism over rising consumer costs, hailed the truce as proof of his tough posture, while Chinese leaders pointed to the agreement as vindication of their diplomatic resilience.
Next Steps and Lingering Questions
Despite the optimism, hard questions remain. The agreement leaves in place steel and aluminum tariffs, auto duties, and other sector-specific levies. De minimis exemptions and non-tariff barriers are deferred rather than resolved. Moreover, with only 90 days on the clock, both sides must now negotiate the finer points of intellectual property enforcement, state subsidies, and financial market access—domains historically resistant to compromise. U.S. Trade Representative Greer and Vice Premier He agreed to reconvene in Washington later this summer, supported by technical teams in Geneva, Beijing, and Washington.
Analysts view the truce as a tactical win rather than a strategic turning point. For the U.S., the deal delays a full-scale trade blockade that could have disrupted critical supply chains, especially in technology and agriculture. For China, the temporary relief preserves export jobs and buffers its slowing industrial sector. Yet both sides understand the fragility of the arrangement: a single tweet, new promise of a campaign rally, or policy directive could unravel three months of laborious diplomacy.
The Geneva truce demonstrates that even amid bitter economic rivalry, pragmatic compromise remains possible—if only temporarily. By staging a face-to-face summit, divorcing technical tariff cuts from more politically charged demands, and crafting a simple 90-day clock, negotiators in Geneva managed to buy time and blunt market fears. Whether that window leads to a durable framework or merely postpones the next escalation depends on the resolve of both Washington and Beijing to convert interim steps into lasting solutions. As negotiators return to their capitals, they carry with them the prospect of a more stable economic relationship—but also the weight of unfinished business on intellectual property, market access, and geopolitical trust. In the coming weeks, the true measure of this deal’s success will be whether it lays the groundwork for a deeper agreement—or simply resets the stage for the next round of tariff brinkmanship.
(Source:www.marketscreener.com)
Setting the Stage: Escalation and Impasse
By early May, tit-for-tat tariffs imposed by both Washington and Beijing had spun out of control. U.S. importers faced an unprecedented 145 percent levy on select Chinese goods—a jump from 34 percent just weeks earlier—while China retaliated with duties as high as 125 percent on U.S. exports ranging from pork to rare earths. Supply-chain snarls, rising input costs, and growing political pressure on both sides created a sense of urgency. Major retailers warned of empty shelves and spiking consumer prices, while Chinese exporters fretted over lost market share in the world’s largest consumer economy. With global markets jittery, President Trump and President Xi Jinping each authorized their economic teams to explore a diplomatic detente.
The venue for this high-stakes diplomacy was an elegant but austere conference center in Geneva, chosen for its neutrality and tradition of facilitating international agreements. Representing the U.S. were Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer, both veterans of previous tariff rounds. China dispatched Vice Premier He Lifeng alongside senior commerce and finance officials. Negotiators from both sides came armed not only with revised tariff schedules but also with binders of data on trade flows, tariff impact studies, and lists of non-tariff barriers.
On the first morning, teams exchanged opening statements underscoring the national stakes: the U.S. lamented the widening trade deficit and risk to American manufacturers; China decried “unilateral tariff hikes” that threatened its export-driven recovery. Officials then retreated to small-group sessions focusing on three key areas: tariff rate adjustments, exclusions for critical sectors, and a mechanism for ongoing dialogue.
Concessions and Counter-Concessions
The heart of the talks revolved around the scale and duration of tariff cuts. U.S. negotiators proposed a phased rollback—first to 50 percent, then further reductions after compliance checks on intellectual property and market access commitments. China countered by insisting on a straight 90-day cut across all contested duties. Weeks of preparatory work on both sides had produced compromise language: a blunt 90-day window during which U.S. rates would drop to 30 percent and Chinese rates to 10 percent, followed by a “review and extension” clause.
Other points of friction included “de minimis” exemptions that the U.S. had rescinded for low-value e-commerce shipments, and Beijing’s non-tariff actions—such as export licensing rules for rare earths and anti-dumping probes—that U.S. firms claimed were equivalent to hidden tariffs. After marathon breakout sessions, negotiators agreed to hold de minimis and non-tariff barrier discussions in parallel working groups, decoupling them from the core tariff truce.
By late Saturday afternoon, negotiators appeared at an impasse over language describing a “joint mechanism” for future talks. Both sides wanted assurances the other would not backtrack—China feared a renewal of “Liberation Day” duties, while the U.S. sought guarantees on Chinese purchases of American goods. In a decisive move, Secretary Bessent agreed to remove three executive orders imposing extra tariffs on select Chinese imports, a gesture that persuaded Beijing to soften its stance on mutual purchases. Minutes later, Vice Premier He Lifeng signaled China’s willingness to lower its duties and suspend export curbs on rare earths for the truce period.
Sunday morning saw a flurry of final edits to the joint statement. The accord spelled out the exact rate cuts, the 90-day duration, and a framework for bi-weekly follow-up meetings between U.S. and Chinese delegations. It also reaffirmed a shared interest in balanced trade and explicitly rejected “decoupling” of the two economies. At 11:15 a.m. Geneva time, both sides announced the agreement to the press, emphasizing that while tariffs remained above pre-April levels, the move represented a “significant de-escalation” and “substantial progress” toward a comprehensive settlement.
Financial markets rallied on the news: U.S. stock futures leapt, the dollar strengthened against major currencies, and oil prices climbed on expectations of smoother supply chains. European exporters, who had suffered collateral damage from the U.S.-China standoff, also saw share prices rebound sharply. Politically, the deal offered breathing room for both administrations. President Trump, facing criticism over rising consumer costs, hailed the truce as proof of his tough posture, while Chinese leaders pointed to the agreement as vindication of their diplomatic resilience.
Next Steps and Lingering Questions
Despite the optimism, hard questions remain. The agreement leaves in place steel and aluminum tariffs, auto duties, and other sector-specific levies. De minimis exemptions and non-tariff barriers are deferred rather than resolved. Moreover, with only 90 days on the clock, both sides must now negotiate the finer points of intellectual property enforcement, state subsidies, and financial market access—domains historically resistant to compromise. U.S. Trade Representative Greer and Vice Premier He agreed to reconvene in Washington later this summer, supported by technical teams in Geneva, Beijing, and Washington.
Analysts view the truce as a tactical win rather than a strategic turning point. For the U.S., the deal delays a full-scale trade blockade that could have disrupted critical supply chains, especially in technology and agriculture. For China, the temporary relief preserves export jobs and buffers its slowing industrial sector. Yet both sides understand the fragility of the arrangement: a single tweet, new promise of a campaign rally, or policy directive could unravel three months of laborious diplomacy.
The Geneva truce demonstrates that even amid bitter economic rivalry, pragmatic compromise remains possible—if only temporarily. By staging a face-to-face summit, divorcing technical tariff cuts from more politically charged demands, and crafting a simple 90-day clock, negotiators in Geneva managed to buy time and blunt market fears. Whether that window leads to a durable framework or merely postpones the next escalation depends on the resolve of both Washington and Beijing to convert interim steps into lasting solutions. As negotiators return to their capitals, they carry with them the prospect of a more stable economic relationship—but also the weight of unfinished business on intellectual property, market access, and geopolitical trust. In the coming weeks, the true measure of this deal’s success will be whether it lays the groundwork for a deeper agreement—or simply resets the stage for the next round of tariff brinkmanship.
(Source:www.marketscreener.com)
