US-China Geneva Deal: Both Sides Slash Tariffs by 115 Percentage Points for 90 Days After Weekend Negotiations

On May 12, 2025, the United States and China announced a 90-day mutual tariff reduction following two days of negotiations in Geneva, Switzerland. Both sides agreed to cut tariffs by 115 percentage points, pulling the two largest economies back from the brink of complete trade decoupling that had escalated to effective rates of 145% (US on China) and 125% (China on US).

The Negotiations

Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer met with Chinese Vice Premier He Lifeng over the weekend of May 10-11 in Geneva. The talks were described by both sides as producing “substantial progress.”

Terms of the Deal

The agreement included the following key provisions:

• Both sides reduced tariffs by 115 percentage points for an initial 90-day period
• U.S. tariffs on Chinese goods: reduced from 145% to 30% (retaining the baseline 10% reciprocal tariff plus the 20% fentanyl-related tariff)
• Chinese tariffs on U.S. goods: reduced from 125% to 10%
• A bilateral consultation mechanism was established with He Lifeng, Bessent, and Greer as designated representatives
• The 90-day window was intended to allow for negotiation of a more comprehensive trade framework

What the Deal Did Not Address

• No structural reforms to Chinese industrial policy or subsidies
• No resolution of intellectual property or technology transfer disputes
• No commitment to specific purchase targets (unlike the Phase One deal of 2020)
• Sector-specific tariffs (steel, aluminum, automobiles) remained in place separately
• The deal was a ceasefire, not a settlement

Market and Economic Impact

Markets rallied on the announcement, extending the recovery that had begun with the April 9 tariff pause. However, even the reduced tariff rates represented a dramatic escalation from pre-trade-war levels — the 30% U.S. tariff on Chinese goods was still far above the pre-2025 baseline.

Significance

The Geneva deal marked the high-water mark of US-China trade de-escalation in 2025. It demonstrated that the 145% tariff regime was unsustainable — supply chains were breaking, consumer goods were disappearing from shelves, and the economic damage was becoming politically untenable. But the 90-day framework also revealed the administration’s pattern: escalate dramatically, create a crisis, then partially retreat while retaining tariff levels far above the starting point. The net effect was a permanent increase in trade barriers dressed up as a negotiating victory. The bilateral mechanism established in Geneva would continue through subsequent rounds, including Stockholm talks in August 2025.