The Fourth Branch

GENEVA — In a dramatic diplomatic breakthrough that has sent shockwaves through global markets, the United States and China have agreed to slash punitive tariffs for 90 days, temporarily ending a trade war that threatened to completely sever economic ties between the world's two largest economies.SourceAI reasoning: This represents a significant development in international trade relations that could have far-reaching implications for the global economy.

The agreement, announced Monday following marathon negotiations in Geneva, will reduce U.S. tariffs on Chinese goods from a staggering 145% to 30%, while China will cut its duties on American imports from 125% to 10%.Source

"We've created a mechanism to avoid the upward tariff pressure," said U.S. Treasury Secretary Scott Bessent, who led the American delegation alongside U.S. Trade Representative Jamieson Greer.SourceAI reasoning: The statement reflects the cautious optimism expressed by U.S. officials, though long-term resolution remains uncertain.

The breakthrough comes after months of escalating tensions that saw tariffs reach levels effectively paralyzing trade between the two economic giants. The conflict intensified dramatically following President Trump's return to office, when he reinstated a 10% tariff on all Chinese imports in February 2025, triggering immediate retaliation.AI reasoning: This summarizes background information provided in the report without direct citation.

By mid-April, economists feared a complete economic decoupling was imminent as U.S. GDP contracted in the first quarter of 2025 — its first decline since 2022 — while China faced slowing manufacturing demand and export disruptions that threatened its stability.AI reasoning: This contextualizes the economic pressures that brought both sides to the negotiating table.

The 30% U.S. tariff rate includes a 20% fentanyl-related levy that remains in place, alongside a 10% baseline tariff, according to the joint statement released by both governments.Source

Beyond tariff reductions, China committed to suspending non-tariff countermeasures imposed since April 2, including export restrictions on rare-earth minerals, while removing American companies from its "unreliable entity list."Source

The agreement's impact varies across economic sectors. Manufacturing stands among the most affected industries, with the tariff reduction providing immediate relief for companies reliant on Chinese components.Source

Technology companies have responded positively, with semiconductor firms seeing stock gains of 4-6% after the announcement, reflecting improved supply chain stability prospects despite uncertainty about the agreement's temporary nature.Source

American farmers welcomed renewed access to China as one of their top export markets, though reaction remained somewhat muted given the deal's 90-day timeframe.SourceAI reasoning: The agricultural sector's cautious response highlights concerns about the agreement's short-term nature.

For global supply chains, the agreement represents a critical turning point. Many companies are using this window to implement a "China Plus One" strategy that reduces concentration risk while maintaining access to China's manufacturing ecosystem.Source

The trade truce has already stimulated global shipping markets, with companies like Maersk and Hapag-Lloyd seeing substantial share price increases as trade volumes are expected to surge.Source

Economists have upgraded growth forecasts for both nations, with China's GDP projections rising from 4.1% to 4.8%, though businesses must prepare for multiple scenarios beyond the 90-day window.Source

The agreement establishes a formal consultation mechanism for continued negotiations, to be led by Chinese Vice Premier He Lifeng, Bessent, and Greer, creating a framework for potentially more comprehensive solutions.AI reasoning: This summarizes a key aspect of the agreement mentioned in multiple sources.

During the Geneva talks, negotiators maintained direct communication with their leadership, with Greer noting that "perhaps the differences were not so large as maybe thought," suggesting potential for further progress in the coming months.Source

Whether this temporary truce evolves into a permanent resolution remains to be seen, but for now, the world's two largest economies have stepped back from the brink of complete economic separation.AI reasoning: This conclusion reflects the report's assessment of the agreement's significance.