De-escalation of US-China Tensions: Geneva Joint Statement Announces Comprehensive Tariff Reduction and Initiates Long-term Dialogue Mechanism

Thaw in Sino-US Economic and Trade Relations: Geneva Joint Statement Significantly Reduces Imposed Tariffs

On May 12, 2025, China and the United States issued the Joint Statement of the Sino-US Geneva Economic and Trade Talks in Geneva, Switzerland. It was announced that through equal consultations, a phased tariff adjustment agreement was reached, pressing the "pause button" on the trade frictions that had lasted for several months. This is the first time that the two sides have reached a substantive consensus on economic and trade disputes since the US unilaterally escalated tariffs in April 2025 and China took countermeasures. According to the agreement, both sides will cancel or suspend most of the imposed tariffs and establish a Sino-US economic and trade consultation mechanism to maintain close communication on concerns in the economic and trade field.

Tariff Adjustment: Bilateral Reduction of 91% of Imposed Tariffs, Partial Suspension of Implementation

According to the joint statement, the US side promised to cancel 91% of the tariffs imposed on Chinese goods under Executive Orders No. 14259 and No. 14266, and modify the 34% "reciprocal tariffs" in Executive Order No. 14257, of which 24% will be suspended for 90 days, and 10% will be retained. China will correspondingly cancel 91% of the counter-tariffs, simultaneously suspend the 24% imposed measures, and retain 10% of the tariffs. This means that within the 90-day "cooling-off period", the actual tariffs imposed by the US on China will be reduced from the peak of 125% to about 30%, and China's tariffs on the US will also be reduced to 10%.

Mechanism Guarantee: Long-term Consultation to Prevent Conflict Escalation

Both sides agreed to establish a normalized consultation mechanism and conduct dialogues regularly in China, the United States, or a third country. A spokesperson of the Ministry of Commerce pointed out that this mechanism aims to "resolve differences in a timely manner and avoid unilateral actions." In addition, China will suspend the non-tariff countermeasures against the US that were implemented since April 2, including technical trade barriers. The tariff adjustment has secured a "buffer period" for the industry, but long-term competitiveness still depends on technological breakthroughs. According to data from the Ministry of Commerce, in 2024, China's import of precision instruments from the US amounted to 90.982 billion yuan, with a domestic production rate of only 1.5%, leaving huge room for substitution. The 90-day tariff suspension period (until August 10) has secured adjustment time for the industry. If the two sides fail to reach a new agreement, the tariff rate may be adjusted back to 34%, and enterprises need to complete supply chain optimization or technical reserve during this period. Despite the alleviation of short-term cost pressure, China still has a high dependence on imports of high-end instruments from the US, and the US also has a high dependence on China's rare earths and precision components. Under the impetus of policies, Chinese manufacturers need to strike a balance between cost and security.

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