On 12 May, officials from the USA and China announced in a joint statement that both sides would suspend most of its reciprocal import tariffs for 90 days as a result of negotiations that took place in Geneva, Switzerland, over the past weekend.

Both countries will slash tariffs on most imports by 115%. New legislations will come into force on 14 May. US tariffs on Chinese product will fall to 30% from 145% announced earlier. On Wednesday, the revised import tariff on materials from China will reflect a 10% one on all countries that Trump imposed using his authority under the International Emergency Economic Powers Act of 1977 (IEEPA) on 5 April along with 20% that President imposed earlier this year on China to fight drug trafficking. Market players believe that 30% is still high and hope that US government will decrease import tariff once again, especially, now that Chinese authorities have expressed increased interest in combating US—China illegal drug trade after negotiations. Chinese steel and aluminum products along with automobiles and auto parts are still impacted by a 25% universal Section 232 tariff, according to market players.

China answered with reducing tariffs on US imports to 10%. Moreover, the country has also agreed to suspend non-tariff measures imposed since 2 April, including sanctions on US defense contractors and export controls on critical minerals. China has been a crucial player in the export market of critical minerals and magnets, which are essential components for automakers, aerospace manufacturers, semiconductor companies, and military contractors worldwide. These materials are key to producing advanced technologies, including cars, drones, robots, and missiles.

The decision to drop reciprocal tariffs is a major step toward easing a trade war that shook the global economy. Both countries recognize the importance of their bilateral economic and trade relationship to the USA and China as well as the global economy. The USA and China also recognize the importance of a sustainable, long-term and mutually beneficial economic and trade relationship. The USA and China will continue discussions on trade. The future talks may be held in China, the United States of third country.

The announcement of the temporal suspension of tariffs has already given a boost to stock markets. However, some investors have concerns as the situation is still uncertain, unstable and may bring more risks.