US and China reach consensus on trade agreement framework
US-China trade negotiations hit a significant stride following the bustling talks held in London from June 9-10, 2025. Marking the opening session of the China-US economic and trade consultation mechanism, these discussions took place just before the looming resumption of colossal ("monster") tariffs. Although progress was deemed modest, both nations made a substantial stride by agreeing to adhere to an earlier pact established in Geneva in May 2023.
In the London Framework Agreement, China retained a 10% tariff on US goods, a decrease from its previous high of 125% before the Geneva talks. The United States, in turn, set tariffs on Chinese imports at 55%, which is less than the colossal tariffs (that briefly peaked above 100-145%) that had once threatened to go into effect after the Geneva pause.
Both delegations agreed, in principal, to this new framework, which essentially solidifies the continuation and consolidation of trade relations. The framework aims to obstruct a rebound to the sky-high tariffs and trade wars witnessed earlier in the year.
Former President Donald Trump proclaimed that a deal has been finalized, emphasizing close partnership with Chinese President Xi Jinping to expand trade prospects. However, the Chinese government has yet to issue an official comment confirming the deal's signing [3][4].
Retracing to the Geneva Agreement in May 2025, both countries agreed to a 90-day moratorium on new tariffs above 100% on each other's imports. This caused US tariffs on Chinese goods to drop from over 100% (and occasionally as high as 145%) to a mere 30%. Chinese tariffs on US goods followed suit, reducing from their peak to 10% [3][4]. The London framework effectively prolongs the Geneva agreement, with both nations expressing a commitment to maintaining the current tariff levels and averting further escalations as long as negotiations continue [3][4].
Financial markets responded with optimism to this progress, as demonstrated by the rise in US stock indices and increased risk-taking among investors. The S&P 500, Dow Jones, and Nasdaq all registered gains following the announcement, reflecting heightened hopes for ongoing stability in US-China trade relations [1][2]. Cryptocurrency markets also benefited from this improved trade sentiment, with Bitcoin and other digital assets witnessing temporary surges as investors viewed the positive news as a boon for riskier asset classes [2].
Although the agreement remains tentative and unconfirmed by both governments, the London talks laid the groundwork for future negotiations and diverted an immediate return to the highest tariff levels [3][4]. Market participants continue to wait with bated breath for further details and official confirmations from both sides.
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- The London Framework Agreement, a continuation of the Geneva agreement, has led to a decrease in tariffs on both US goods (55%) and Chinese imports (10%) compared to the colossal tariffs (100-145%) initially planned.
- The progress in US-China trade negotiations, as reflected in the London Framework Agreement, has positively impacted financial markets, with rises in US stock indices, increased risk-taking among investors, and temporary surges in cryptocurrency markets, while markets continue to await official confirmations from both governments.
