Top US officials walked out of two intense days of trade talks with China and confirmed a breakthrough that could ripple across the global economy.

“I’m happy to report that we’ve made substantial progress between the United States and China in these very important trade talks,” said US Treasury Secretary Scott Bessent on Sunday from Geneva, where the meetings took place. US Trade Representative Jamieson Greer also confirmed a deal was on the table.

Bessent and China’s Vice Premier He Lifeng spent the weekend behind closed doors, marking their first face-off since President Trump’s sweeping tariffs on Chinese imports. Lifeng described the discussions as “in-depth” and “candid.”

While full details of the agreement are expected Monday, Bessent had made it clear earlier that his top priority was easing tensions. The US-China standoff had been dragging on for months, with both sides locked in a stalemate that wasn’t sustainable.

Here’s what the numbers looked like- Washington had slapped a massive 145% tariff on Chinese imports, while Beijing hit back with a 125% tariff on US goods – plus export controls on key rare earth materials. This was starting to resemble a full-blown trade freeze between the world’s two biggest economies. And it was clear, someone had to blink. That someone seems to have been the US.

The Give and Take – Lower Tariffs, Concessions, and a Nod from Beijing

Although the exact terms are still under wraps, President Trump had hinted ahead of the Geneva talks that he was open to slashing tariffs down to 80%. In a Truth Social post, he wrote that the next move was “up to Scott B.,” giving Bessent full authority to cut a deal. The White House later clarified that any deal would also need concessions from China. Economists quoted said a 50% tariff rate is the tipping point that could bring back some sense of normalcy to US-China trade.

So why was Washington in such a hurry?

Simple, rising prices and empty shelves. With Chinese imports slowing and costs climbing at US ports, inflation was heating up. Analysts at Goldman Sachs projected inflation could hit 4% by year-end thanks to the ongoing trade tensions – a worrying scenario for the administration.

On the ground, the signs were already visible-  import activity at major ports had slumped, air freight from China was down, and retailers like Walmart and Target were warning of product shortages and higher prices.

In short, the US had little choice but to find a way forward. The deal may not be perfect, but it’s a step toward de-escalation and that’s something global markets are happy about. Still, with the fineprint yet to be revealed, and uncertainty lingering, investors aren’t popping champagne just yet.

China Declares Victory in U.S. Trade Deal, Claims Strategy Paid Off

Chinese officials, state media, and even social media influencers were quick to celebrate Monday’s trade breakthrough with the U.S., calling it a big win for Beijing and validation of their tough negotiation tactics.

The sentiment out of China is clear – standing firm worked. According to a post by a social media account tied to CCTV, the national broadcaster, “China’s firm countermeasures and resolute stance have been highly effective.” The narrative is that China played the long game and came out ahead with minimal concessions.

From the public’s point of view, Beijing appears to have pushed the Trump administration into rolling back the previously sky-high 145% tariffs down to 30%. In return, China is cutting its own countertariffs on U.S. goods from 125% to 10%.

And it’s making waves online. On Weibo, a hashtag referencing the 24% tariff reduction in the joint U.S.-China statement has already racked up more than 420 million views.

A Pause That Says a Lot

The 90-day pause in tariffs, which takes effect Wednesday, is being used by Beijing not just as a diplomatic win, but as an opportunity to show the world that it’s a responsible player in global trade. That’s despite long-standing frustrations from international business groups over what they call “promise fatigue”, a tendency for Chinese negotiators to talk about cooperation without following through in practice.

Still, as part of the agreement, Beijing has committed to working with Washington on a new “consultation mechanism” to keep trade conversations going beyond just this deal.

Interestingly, China had already begun making quiet moves even before the talks concluded, issuing select tariff exemptions to some companies operating in the country. Now, it has formally agreed to suspend or remove its non-tariff countermeasures, including the more recent clampdowns on rare earth exports – materials crucial to key U.S. industries.

Rare Earths Still a Sticking Point

That said, Beijing is sending somewhat mixed signals on rare earths. While it agreed in the deal to lift the newest restrictions, China’s Commerce Ministry also reiterated its crackdown on smuggling for “national security” reasons, and pointed a finger at “foreign entities” as part of the problem.

Ahead of the weekend’s negotiations in Geneva, China had stood its ground publicly, insisting it wouldn’t compromise on key priorities just to get a deal. Now that an agreement is in place, Beijing is making sure the world knows: it didn’t back down—it played it smart.

Markets Jump After U.S.-China Tariff Truce, But Big Questions Still Linger

Global markets breathed a sigh of relief on Monday as the U.S. and China agreed to hit pause on their escalating trade war, dialing back steep tariffs for at least 90 days. The temporary truce sent stocks surging worldwide, offering investors some hope after months of volatility and recession fears.

While the reprieve sparked a broad rally – Wall Street’s S&P 500 hit its highest level since early March and the Nasdaq reached a late-February peak- businesses are still waiting for more clarity. For now, the conflict that froze nearly $600 billion in trade and disrupted global supply chains is on hold, not resolved.

The dollar gained ground and gold prices slipped as the market welcomed the news, though concerns about the long-term fallout from President Trump’s trade war haven’t disappeared. The White House, meanwhile, touted the agreement as validation of Trump’s aggressive strategy.

“They’ve agreed to open China—fully open China,” Trump said, calling the deal “fantastic” for both countries and a step toward global peace. The announcement follows a similar preliminary trade pact with the U.K.

Yet many of the deeper tensions between the two countries remain unresolved.

Trade imbalances, concerns over U.S. manufacturing jobs, and broader questions around enforcement weren’t directly addressed. Even Treasury Secretary Scott Bessent, who led negotiations over the weekend in Geneva, admitted that reshaping the U.S.-China trade dynamic could take years.

The Impact on US-China Economy

The trade war has started to impact Chinese factory output, with manufacturing activity contracting in April at its fastest pace in over a year. That said, Beijing appears more insulated from immediate political or economic fallout. China is also in the midst of a stimulus rollout, combining fiscal spending and monetary easing to support its economy.

In contrast, the U.S. finds itself with limited fiscal tools, apart from potential tax concessions. More importantly, a looming confrontation between the White House and the Federal Reserve could further complicate the situation. While Trump has pushed for rate cuts to support the economy, Fed Chair Jerome Powell has indicated such a move is unlikely in the near term.

The Last Bit, A Fragile Truce With No Structural Fixes

Economists warn that this truce, while welcome, does little to address the deep imbalances that led to the trade war. These include long-standing concerns over intellectual property theft, industrial subsidies, forced technology transfers, and the U.S. trade deficit with China.

Martin Wolf, Chief Economics Commentator at the Financial Times, was blunt in his assessment: “This trade war is going to damage American business very, very considerably. It’s going to make the supply chains in America extremely fragile… The Americans will have to be much cleverer than they’ve been so far.”

In the end, the current agreement may be more of a pause than a resolution. For global markets, it’s a reprieve. For businesses, it’s a brief window to recalibrate. But without a durable framework, the risk of escalation remains and the global economy continues to sit on edge.