US-China Trade Truce: Tariffs Slashed, Markets Rally

The United States and China have signed on to a 90-day truce beginning Wednesday, May 14, 2025, which entails steep tariff cuts. The U.S. would reduce its tariffs on Chinese goods from 145% to 30%, while China would reduce its tariffs on U.S. goods from 125% to 10%. The move is to ease trade tensions and give a chance for further negotiations.

Apart from slashing tariffs, China will remove some non-tariff barriers, including restrictions on export of rare earth to America. The two countries have agreed to resume talks on more fundamental issues of trade. Nevertheless, analysts suggest that the agreement brings relief for only a limited period and does not deal with underlying conflicts.

Release of these tariff cuts has seen a surge in global stock markets as a sign that there is a chance of a reduction in trade tensions. Despite this positive market response, there is still doubt whether the long-term settlement of trade disputes will be realized.