In a major step toward easing trade tensions, the US and China have agreed to significantly reduce tariffs, marking a shift from confrontation to cooperation between the two largest global economies. Announced following talks in Geneva, the agreement lowers US tariffs on Chinese goods from 145% to 30%, while China will reduce its retaliatory tariffs on US goods from 125% to 10%. A separate 20% US tariff on fentanyl, which is at the centre of the US-China trade fight, remains in place. The tariff cuts are temporary, lasting 90 days as negotiations continue.
The trade war had raised fears of a global recession by severely disrupting supply chains and driving up costs. Now, renewed progress in US-China negotiations offers a potential turning point – restoring investor confidence, stabilising global markets and easing pressure on prices for raw materials and manufactured goods. The impact was immediate – by the morning of Monday, 12 May, markets responded strongly, with major indices surging and tech stocks rallying, signalling fresh optimism among businesses and investors after months of uncertainty.
The move by the world’s two largest consumers of crude oil also provided immediate relief to energy markets, lifting some of the pressure that had built up during months of trade tensions. Oil prices surged on the announcement, reflecting renewed optimism about global economic growth and stronger energy demand. Brent crude futures rose $2.03, or 3.18%, to $65.94 a barrel by mid-morning in London (Reuters).
For people around the world, easing the trade war might lead to slightly higher fuel prices. But the bigger benefits – like a more stable economy, more jobs and lower prices on goods – could make up for those small increases. If the agreement lasts, it could boost business investment and help people feel more confident about the global economy. In short, even if fuel costs go up a little, the long-term economic gains could be worth it.
The Geneva talks are a hopeful sign, but a lasting solution will need continued talks and real progress on deep-rooted structural issues such as trade imbalances and technology-related restrictions. Continued cooperation, transparency and mutual concessions will be key to building a stable and fair economic relationship between the two global powers.
