Inside the U.S.-China Trade Cease-Fire

Treasury Secretary Scott Bessent this morning announced a major, though temporary, breakthrough in trade talks with China.Credit…Jean-Christophe Bott/Keystone, via Associated Press

A 90-day pause

Stocks, the dollar and oil are soaring on Monday after President Trump’s top negotiators outlined the specifics of a major — though temporary — de-escalation in the U.S.-China trade fight.

Expectations were sky-high for some kind of breakthrough. The market reaction suggests mission accomplished in terms of reaching an important détente, though significant trade barriers remain and plenty still needs to be worked out.

“The consensus from both delegations is that neither side wanted a decoupling,” Treasury Secretary Scott Bessent, who was a point person in the U.S.-China talks in Geneva over the weekend, said on Monday. “Now we have the mechanism in place for further talks,” he added, noting that the framework agreement expires after 90 days. Those talks could come in “the next few weeks,” Bessent told CNBC.

Here’s what is in the agreement:

• The U.S. will lower tariffs on Chinese imports to 30 percent from its current 145 percent.

• China will lower duties on U.S. goods to 10 percent from 125 percent.

• Sector-specific tariffs are not part of this deal, according to Jamieson Greer, the U.S. trade representative. Trump has imposed targeted levies on items including Chinese-made semiconductors, medical devices, and aluminum and steel imports.

• China will remove nontariff export controls, but did not say whether it would lift restrictions on critical mineral shipments to the U.S. Beijing said it looked forward to stable and sustainable trade relations.

Both sides appear to see futility in clobbering each other with huge tariffs. The tit-for-tat measures had created “the equivalent of an embargo, and neither side wants that,” Bessent said. Companies have been warning that the levies would upend küresel supply chains and force them to raise prices. (Apple is weighing raising prices on its fall lineup of iPhones, but is determined not to blame tariffs publicly for the move, according to The Wall Street Journal.)

That uncertainty has virtually paralyzed corporate investment and hiring, analysts say, and pushed the Fed into limbo on interest rates as it watches for any fallout on inflation and the labor market.

Trump seems onboard with Monday’s agreement. Yesterday, he hailed the state of talks on Truth Social, calling it “a total reset negotiated in a friendly, but constructive, manner.”