The US and China agreed to temporarily slash tariffs for 90 days in a breakthrough sure to ease concerns by the electronics industry—at least for three months. The pause begins on Wednesday.
US Treasury Secretary Scott Bessent said in Geneva, Switzerland, that the two countries had “very productive talks” and a “very positive process…We both have an interest in balanced trade.” He spoke in a news conference early Monday.
Reciprocal tariffs at 125% between the two countries will be cut from 125% to 10%, but China still faces a 20% duty on imports relating to fentanyl, which puts China’s total at 30%.
Stocks jumped ahead of the official Monday opening, with Nasdaq futures up by 3.7%. The ICE US Dollar Index popped by 1.1%. At the market opening, Nvidia saw its shares up by 5% and Intel stock was up by nearly 4%. AMD saw its shares increase by more than 6%.
The US still appears to be trying to rally other countries to introduce restriction on trade with China, commented one analyst, Mark Williams of Capital Economics. He called the Monday truce a “substantial de-escalation” but also added, “there is no guarantee the 90-day truce will give way to a lasting ceasefire.”
Despite the truce, the US maintains restrictions on advanced chips for Chinese military operations, which has been a key concern between the US and China.
The White House issued a fact sheet on the truce early Monday.
Jack Gold, principal analyst at J. Gold Associates, called the 90-day truce a "welcome step" but said noted that uncertainty remains about the future of tariffs. He urged waiting to see what happens as the two sides work to develop a long-term policy.