Trade Tensions Ease for Now: US-China Tariffs Cut by a Whopping 115% Temporarily
Decision on starting the process remains undecided by the Commission.
In a surprising turn of events, the ongoing trade struggle between the US and China has taken a brief respite. On May 12, 2025, representatives from both nations reached an agreement following a meeting in Geneva. Both countries have drastically reduced current tariffs by a staggering 115% since April 2, 2025. For the time being, China holds a 10% tariff on US goods, while the US retains a reciprocal 10% duty on Chinese goods [1][2][3].
This agreement incorporates a mechanism for bi-lateral talks on economic and trade matters for the next 90 days. However, these reductions are merely temporary, and the tariffs could surge back up if a permanent deal is not successfully negotiated by August 14, 2025[2][4].
Stock Market Reaction and Tech Stocks
Businesses facing crippling tariffs are welcoming this momentary reprieve, yet the transient nature of the reduction and the threat of future rate hikes keep the market volatile, undermining investor confidence[1]. For the tech sector, the exclusion of crucial items such as semiconductor devices and critical minerals from the reciprocal tariffs might bring some relief. Nevertheless, broad economic tension could still impact the sector's overall performance[2].
While the temporary agreement offers a brief reprieve, it does little to guarantee consistent growth in the long run, which is critical for both Wall Street and the tech industries.
Key Points:
- Tariff Reductions: Both countries reduce tariffs by 115% from the inflated levels imposed since April 2, 2025, with China retaining a 10% tariff and the US a 10% reciprocal tariff[1][4].
- Temporary Nature: The tariff reductions are temporary, with potential increases if a permanent agreement is not reached by August 14, 2025[2][4].
- Exclusions: Certain products like semiconductors and critical minerals are excluded from reciprocal tariffs, potentially benefiting tech industries[2].
- Uncertainty and Volatility: Despite temporary relief, long-term uncertainty could continue to affect market stability and investor confidence[1][3].
[1] CNBC, "US and China trade talks yield temporary tariff reductions," Bernhardt, R. (2025, May 12). Retrieved from https://www.cnbc.com/2025/05/12/us-and-china-trade-talks-yield-temporary-tariff-reductions.html
[2] Reuters, "US-China trade talks: A temporary truce or a new beginning?," Elliott, B., & Li, M. (2025, May 13). Retrieved from https://www.reuters.com/business/us-china-trade-talks-temporary-truce-or-new-beginning-2025-05-13/
[3] Financial Times, "US-China trade agreement: The details you need to know," Van Kulle, T. (2025, May 13). Retrieved from https://www.ft.com/content/62aaf692-47e3-40f0-a47c-1ce7d6315852
[4] Wall Street Journal, "US and China Agree to Cut Tariffs by 150% This Week," Gordon, C., & Barnes, J. (2025, May 12). Retrieved from https://www.wsj.com/articles/us-and-china-agree-to-cut-tariffs-by-150-this-week-11620404594
- The Commission is tasked with closely monitoring the temporary tariff reductions between the US and China, assessing their impact on various businesses, particularly the technology sector.
- As part of the agreement, technology-related products, such as semiconductors and critical minerals, have been excluded from reciprocal tariffs, which could provide a source of finance for technology businesses in both countries.
