Uncertainties linger as US, China agree to 90-day tariff truce

President Donald Trump and China reached a dramatic de-escalation in their trade war, slashing tariffs by 115 percentage points effective Wednesday. But while the news sends global markets soaring, it leaves significant uncertainty hanging over businesses and consumers.

After weekend talks in Geneva led by Treasury Secretary Scott Bessent, the U.S. cut tariffs on Chinese goods from 145% to 30%, while China reduced its retaliatory duties from 125% to 10%. The White House also issued an executive order lowering tariffs on lower-value packages from Chinese e-commerce sites like Shein and Temu from 120% to 54%, though a minimum $100 fee will remain.

The agreement ends what had become a de facto trade embargo between the world’s two largest economies, reducing the chances of barren shelves for the holidays.

Chinese officials are celebrating what many analysts view as a diplomatic victory achieved by matching Trump’s tariffs point-for-point and restricting critical minerals exports. “This is called, ‘victory,’” Hu Xijin, former editor of the state-run Global Times, posted shortly after the announcement, comparing it to driving “the Americans back to the 38th parallel.”

President Xi Jinping took a more diplomatic tone on Tuesday, saying “bullying and tyranny will only lead to self-isolation” and “there are no winners in trade wars.” He pledged a 66 billion yuan ($9.2 billion) credit line for Latin American and Caribbean countries, positioning China as a reliable trade partner amid U.S. policy uncertainty.

While the 90-day agreement provides temporary relief, it leaves unresolved tensions. Trump warned that if China does not agree to a deal within this window, tariffs will return at “substantially higher” rates. Notably, tariffs from his first term — including a 20% duty imposed in February over fentanyl precursor chemicals — will remain in place.

For now, companies are expected to restock while lower rates apply. Meanwhile, economic policy uncertainty has reportedly hit record highs, surpassing levels seen during the 2008 financial crisis and 2020 pandemic.