US, China agree to 90-day pause, reduce tariff levels to 30%; here's all you need to know

In the latest press briefing by the US trade officials announced a breakthrough in the US and China trade talks, both nations agreed for 90 days pause and reduce the tariffs by 115%. Scott Bessent Said, “I'm happy to report that we made substantial progress between the US and China in the very important trade talks."

The US and China trade representatives met on 10 and 11 May to discuss negotiations on tariffs. This is the first active conversation between the two countries after the trade war announced a slew of tariffs on each other. The US imposed 145% tariffs on China, for which China announced retaliatory tariffs of 125%. Currently, China holds the highest tariffs from the US after the Trump administration announced a 90-day pause on reciprocal tariffs, except for China. The meeting is considered at a crucial juncture, when global trade faced immense pressure. Early estimates suggest a nearly 50-60% drop in trade between the two nations. US imports from China dropped 60%, and 30% of the shipments stand cancelled.

Amid a sharp drop in the bilateral trade and the stalemate between the two governments ended, and they agreed to meet in Switzerland on May 10 and 11 to initiate trade talks. U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer met the Chinese Vice Premier He Lifeng. The discussions were held in a candid and in-depth manner, and details of which will be announced in a press briefing on Monday.

The US Treasury secretary described the talks as “constructive and productive”, while Chinese Vice Premier He Lifeng said talks were “Candid and in-depth”. President Donald Trump posted on the social media platform X that the talks conducted are very good and negotiating in a friendly but constructive manner. He also said, “ We want to see, for the good of both China and the US, an opening of China and American business. Great Progress made”.

Soon after the news broke out on successful talks between the two countries, markets started to react positively. The US market futures jumped nearly 2% on NASDAQ and 1.5% on Dow Jones and 0.7% on the S&P 500. On the other hand, Asian markets gave a muted response to the developments as the Japanese index traded flat-to-positive, and Hong Kong, Chinese and Korean indices traded with gains of less than 1%

The dollar index also rose 0.2% and traded above 100, extending the rally. The haven asset, Gold, also lost some glitter as the prices corrected 1.4% on Monday morning below 3,300 per ounce. Similarly, the crude oil prices breathed a respite and jumped by over 1%, extending the rally from three-year low levels.

What lies ahead?

As US and China trade talks progress, the other small nations and trading partners of the US also remain optimistic about the trade deal with them. The US and China hold nearly $600 billion worth of trade between them. India, too, remains optimistic about the trade talks with the US, which have already commenced, and expects to see the deal finalised soon. With the trade war waning away, global trade is expected to resume back to normal levels soon. The global markets are expected to see strong inflows back into equities from safe-haven assets like gold and bonds, as the key overhang on the global economy and markets is removed.