The US-China trade war has produced some enormous numbers in 2025. But the most important number may be the one both countries just decided to reduce: their tariffs.
After negotiations in Geneva, the United States and China agreed to a 90-day reduction in tariffs, significantly lowering the extraordinary duties imposed during the escalation.
China announced that its 34% tariff on US goods would fall to 10%, while also cancelling additional duties that had been planned.
The agreement matters because it reveals something basic about trade wars.
Tariffs can be politically attractive, but extremely high tariffs quickly become economically destructive for both sides.
American businesses importing Chinese goods face higher costs. Chinese manufacturers lose access to an important market. Supply chains become more expensive to reorganise. Consumers eventually face some combination of higher prices and reduced choice.
The temporary agreement therefore does not mean the trade war is over.
It means both sides have discovered a point at which continuing the escalation becomes more expensive than negotiating.
The 90-day period is particularly important.
Businesses now have a temporary window in which tariffs are substantially lower. That gives importers time to place orders, manufacturers time to adjust supply chains and governments time to negotiate a longer-term agreement.
But it also creates a problem.
Companies making investment decisions need more than 90 days of certainty.
If firms believe tariffs will return once the temporary agreement expires, they may continue shifting production away from China. If they believe a lasting agreement is possible, investment patterns could begin to stabilise.
That means the biggest economic consequence of Geneva may not appear in trade data immediately. It could appear in capital expenditure decisions over the next six months.
There is also a lesson for the rest of the world.
The US-China relationship is too economically important for a prolonged trade war to remain isolated. China is deeply embedded in global manufacturing supply chains, while American consumers and companies remain major sources of global demand.
A tariff between Washington and Beijing therefore travels through factories, shipping companies, retailers and consumers thousands of kilometres away.
The Geneva agreement is not a return to free trade.
It is a reminder that there is a limit to how far two economically interdependent countries can push a trade war before both sides start paying the price.
The question now is whether 90 days is enough time to turn a temporary truce into a permanent trade arrangement.
