The 90-day US-China tariff truce negotiated in Geneva on May 12 officially takes effect on May 14, immediately reducing the effective tariff rate on Chinese goods entering the United States from 145% to 30%. The truce covers approximately $440 billion in annual bilateral trade and represents the first significant de-escalation in the trade war since tariffs were ratcheted up in early 2025.
Supply chain managers at major U.S. importers including Walmart, Nike, and Apple are scrambling to accelerate purchase orders and shift shipping schedules to take advantage of the 90-day window, during which permanent trade framework terms will be negotiated at the Trump-Xi summit in Beijing.
What happened
U.S. Trade Representative Jamieson Greer published the formal tariff schedule adjustment late on May 13, effective at 12:01 AM ET on May 14. The truce reduces tariffs on most Chinese goods from the current 145% rate to 30%, with certain categories of advanced technology including AI chips, quantum computing equipment, and military-use materials excluded from the reduction. The 90-day clock starts May 14 and expires August 12, 2026, unless extended by mutual agreement. During this window, U.S. and Chinese trade negotiators will work on a permanent framework that could include further tariff reductions, intellectual property protections, and market access provisions. China reciprocated by reducing its retaliatory tariffs on U.S. agricultural products from 125% to 25%.
Why it matters
The tariff reduction from 145% to 30% is economically significant -- at 145%, most Chinese goods were effectively priced out of the U.S. market, forcing importers to source from Vietnam, India, and Mexico at higher costs and longer lead times. At 30%, Chinese goods become competitive again for many product categories, which could lower consumer prices and ease some of the inflationary pressures that have been pushing CPI and PPI higher. However, the 90-day window creates uncertainty about whether this is a permanent shift or a temporary reprieve.
Market impact
China-exposed equities rallied on the truce. FXI gained 3.4% on May 13, while