In a major development that could reshape global trade dynamics, the United States and China have agreed to a 90-day ceasefire in their escalating tariff war. As reported by The Guardian today, Monday, May 12, 2025, the breakthrough deal involves both nations rolling back punitive import taxes—marking a cautious yet promising step toward stabilizing a volatile global economy.
The United States will reduce tariffs on Chinese goods from a steep 145% to 30%, while China has agreed to cut its tariffs on U.S. imports from 125% to 10%. The announcement sent shockwaves through global financial markets, with stock indexes in Europe and Asia recording significant gains. Commodity prices like oil and iron ore also surged, while traditional safe-haven assets such as gold dropped over 3% as investor confidence returned.
Trade analysts say this truce is a short-term relief but not a permanent solution. “Markets were bracing for more pain. This move, though temporary, signals that dialogue is still possible,” said Li Cheng, a trade policy expert based in Singapore. “But it’s far from a resolution.”
The U.S.-China trade war has been ongoing for months, with both countries accusing each other of protectionism, currency manipulation, and intellectual property theft. The rising tariffs had started to affect global supply chains, increase production costs, and hurt consumer spending across multiple sectors.
Many businesses on both sides are welcoming the pause. American soybean farmers and Chinese electronics exporters, in particular, stand to benefit from lower trade barriers. “We were getting squeezed from both sides—input costs were high, and sales were slowing,” said Angela Martinez, a soybean grower from Iowa. “This reprieve gives us room to breathe, even if just for a while.”
This 90-day window is seen as a critical moment for both nations to find a more lasting agreement. Economists warn that if talks collapse, markets could tumble again and tariffs could return even higher. The outcome of this temporary trade truce could have lasting effects on global supply chains, import-export policies, and investor sentiment around the world.
The breakthrough provides hope amid a tense geopolitical climate. It shows that despite major disagreements, negotiation is still possible between the world’s two largest economies.
