Surprise US-China tariff deal slashes rates for 90 days

The bell has dinged, and both heavyweights are headed back to their corners.

In a surprise breakthrough, the US and China yesterday agreed to drastically roll back tariffs on each other’s goods for an initial three-month period, marking a de-escalation in the budding trade war between both nations.

The duty deets

Under terms of the deal, the US will lower its base level of tariffs on most Chinese goods from 145% to 30%, while China will cut its duties on American-made products from 125% to 10%. 

• Both countries agreed to keep the lower tariff levels in place for 90 days, with the goal of working toward a broader trade deal in further talks. President Donald Trump expected to speak with Chinese leader Xi Jinping this week.
• China also said it would cancel or suspend some retaliatory nontariff trade measures it had imposed on the US, which could potentially include easing export restrictions on critical minerals used in batteries and high-tech products.

Markets react: US stocks closed higher on the news (S&P: +3.3%; Dow: + 2.8%; Nasdaq: +4.4%). The Nasdaq officially entered a new bull market (up 20+% from a recent low), while the Dow exited correction territory (down 10+% from a recent high).

Zoom out: The US government collected a record-high $16.3 billion in customs duties in April—$7.6 billion more than it did in March—as revenue from tariffs ramped up sharply, the Treasury Department revealed yesterday.