The U.S. and China agreed Monday to reduce tariffs on each other’s goods by 115% for an initial 90-day period, while trade talks continue.

Treasury Secretary Scott Bessent said the U.S. will lower tariffs on Chinese imports from 145% to 30%, while China will slash its tariffs on American goods from 125% to 10%. The changes are set to take place by May 14.

Markets boomed Monday after the news. The Dow rose more than 1,000 points, close to 3%. The S&P 500 climbed more than 3%, and the tech-heavy Nasdaq Composite gained more than 4% by the end of the day.

THE ROOM WHERE IT HAPPENS
It follows a weekend of negotiations in Switzerland. The world’s two largest economies made the announcement in a joint statement that recognized “the importance of a sustainable, long-term, and mutually beneficial economic and trade relationship.”

Bessent confirmed that the 20% tariffs President Trump imposed on China in February – aimed at pressuring Beijing to crack down on exports of the chemical ingredients used to make fentanyl – will remain in place. So, too, will a 10% baseline tariff placed on nearly all of the U.S.’s trading partners.
- Bessent said China “understood the magnitude” of the U.S. fentanyl crisis and showed positive signs of working toward a deal that addresses its role.
The worst of it behind us? Bessent noted that negotiations are just beginning, but that both sides agreed to a framework to continue talks, which he said should largely prevent the tit-for-tat escalation we saw the past couple months.

Later Monday, President Trump added that China also agreed to suspend non-monetary trade barriers and “fully open” its markets to American companies as part the temporary agreement. However, he acknowledged that the agreement still needs to be finalized on paper.

TOO SOON TO CELEBRATE?
CNN pointed out that while the market’s gains Monday are a direct reaction to the president’s moves, they are relative — as tariffs remain elevated and trade negotiations will continue.