The US-China trade war, which has threatened the global economy, has reached a dramatic turning point. The two nations, having driven the world economy to the brink in a high-stakes game of chicken, have agreed to significantly reduce mutual tariffs by 115 percentage points each for 90 days. During this truce, the G2 powers are expected to pause their trade conflict and engage in further negotiations on various issues.

US Treasury Secretary Scott Bessent, US Trade Representative Jamieson Greer, and Chinese Vice Premier He Lifeng announced on December 12 in Geneva, Switzerland, that both countries would lower their mutual tariffs by 115 percentage points.
According to a joint statement by the negotiating teams, the US will immediately cancel 91% of the 125% additional tariffs imposed on Chinese goods since November 2, while suspending 24% of those tariffs for 90 days. However, the 20% tariffs related to fentanyl, imposed at 10% each in February and March this year, will remain in place. As a result, the US tariffs on Chinese goods, which stood at 145% under the second Trump administration, will drop to 30%. This is interpreted as combining the 10% baseline tariff President Trump pledged to impose on all trading partners with an additional 20% to hold China accountable for fentanyl precursor exports.

China, in turn, reduced its retaliatory tariffs on the US by the same margin of 115 percentage points, lowering its rate from 125% to 10%. Excluding the US’s 20% fentanyl-related tariffs, both nations agreed to maintain mutual tariffs of 10%. The agreement will be implemented by December 14, with the reduced tariffs applied for 90 days, during which further negotiations will continue through established channels. This tariff truce comes 38 days after China imposed retaliatory tariffs in response to the US’s initial measures.

On the same day, President Donald Trump held a press conference at the White House, stating, “We have achieved a complete reset of our relationship with China.” He emphasized the deal’s success, saying, “China will suspend and eliminate all non-tariff barriers. They have agreed to do so. There are many such barriers, but the biggest for me is that they have agreed to fully open the Chinese market.”
The breakthrough was achieved through high-level marathon talks held in Geneva on December 10 and 11. Treasury Secretary Bessant remarked, “The high tariffs had resulted in what amounted to an embargo between the two countries. Neither side wanted such an outcome, and we seek balanced trade.” China also expressed a positive view of the agreement, signaling its intent to strengthen cooperation with other countries affected by US tariffs.

This agreement is expected to temporarily calm the escalating tariff war between the two nations. However, experts caution that it does not signify the end of the US-China trade war or the resolution of inflation concerns in the US.
Alicia Garcia-Herrero, chief economist at investment bank Natixis, told The Washington Post, “This agreement is not a solution.” She noted that it paves the way for future talks between President Trump and Chinese President Xi Jinping, with a final resolution to the trade war likely requiring a meeting between the two leaders.
Meanwhile, as fears of a recession ease, expectations for an early interest rate cut by the Federal Reserve (Fed) have significantly diminished. According to the Chicago Mercantile Exchange’s FedWatch tool, the futures market now assigns a 57% probability to the Fed maintaining current interest rates at the July 29–30 FOMC meeting, a sharp rise from 40% on December 9.
By Reporter Park Hong-yong