A significant change that is likely to have a major impact on global markets global markets are set to be impacted by the fact that the US and China agree on tariff Pause for 90 days over their growing trade war, which is accompanied by a major cut in tariffs. The announcement, on the 12th of May 2025, follows intense negotiations in Geneva and will provide needed relief for a range of sectors, including the technology industry, which has seen the price of devices shifting in the face of a prolonged trade dispute.
Under the agreement, the US will slash tariffs on a wide range of Chinese goods from a staggering 145% to a more modest 30%. As a result of a reciprocal agreement, China will lower its tariffs on American imports, ranging from 125 per cent to 10%. Although this may seem to be an enormous shift, both sides have described the move as a temporary truce that is designed to allow breathing space to discuss the issue more deeply rather than the final solution.
The tech sector, long at the mercy of international trade skirmishes, is one of the clear beneficiaries of this deal. Over the past few years, rising tariffs have driven up the costs of everything from microchips to display panels—components essential to devices like smartphones, tablets, and laptops. The consequence? Higher prices for end-users and disrupted innovation pipelines. But now, with tariffs rolling back, industry analysts are optimistic that device pricing could finally stabilize, if not drop slightly, in the coming weeks.
“It’s not just about retail prices,” said Aditi Mukherjee, a global supply chain strategist based in Singapore. “Tariff uncertainty made forecasting and procurement incredibly difficult. With this pause, companies can replan inventories, resume negotiations with overseas suppliers, and invest in R&D with greater confidence.”
Financial markets quickly mirrored this optimism. Wall Street responded with a wave of bullish activity—the Dow Jones Industrial Average climbed over 400 points in a day, while the S&P 500 and Nasdaq both posted gains exceeding 1.5%. Meanwhile, tech-heavy indices in Asia saw sharp spikes, led by Chinese and South Korean tech manufacturers whose export prospects just got a lot brighter.
Still, the 90-day window is more of a ceasefire than a peace treaty. Analysts across the political spectrum warn against over-interpretation. This is not a total rollback, nor is it guaranteed to continue beyond the agreed period. The core structural issues that sparked the trade war in the first place remain unresolved: forced technology transfers, lack of intellectual property protection, state subsidies, and growing competition over strategic sectors like AI, semiconductors, and green energy.
US Treasury Secretary Scott Bessent, in a press briefing, emphasized that this agreement is “an opening, not an ending.” He said the US is using this pause to engage in what he called “strategic rebalancing” across critical supply chains. That includes pharmaceuticals, rare earth minerals, and—most notably—semiconductors. “We’re not just looking at economics,” Bessent noted. “This is also about national security, resilience, and sovereignty.”
China has, for its part, also used the time pause as a strategy reset, not an offer to negotiate. The top Chinese diplomatic official, Liu He, who co-chaired the Geneva talks, said that China continues to be determined to “open, rules-based trade” but is expecting “mutual respect and non-interference” for its part. Notably, China has agreed to participate in ongoing discussions about curbing fentanyl trafficking—a US priority—as part of a broader cooperative framework.
As part of the agreement, a formal mechanism will be established for structured dialogue in the future. This is one of the most underappreciated aspects of the deal. It lays the groundwork for regular engagement and provides a channel for conflict resolution, potentially reducing the kind of abrupt tariff escalations that rattled markets over the last few years.
From a consumer standpoint, the immediate impact is most likely felt in the gadget aisle. Products that rely heavily on Chinese manufacturing—like smartphones, smartwatches, and even household electronics—could become slightly more affordable. “We’re expecting a 5–10% decrease in gadget prices by mid-summer,” said Paul Hargreaves, a senior analyst at TechMarkets Global. “That’s not huge, but it’s enough to stimulate demand that’s been sluggish due to cost concerns.”
Retailers are also gearing up for an increase in sales of consumer electronics. As mid-year shopping days like Amazon Prime Day and summer back-to-school sales are coming up, discounts on prices could be available the consumers who have been putting off big purchases.
However, manufacturers and supply chain managers remain cautiously optimistic. The 90-day pause doesn’t erase the unpredictability of future trade policies. If talks fail or another disagreement erupts, tariffs could return quickly—and possibly in even harsher forms.
It’s also worth noting that this agreement doesn’t completely solve issues for companies that have already relocated or diversified their supply chains due to prior tariffs. Firms that moved production to Vietnam, India, or Mexico may not rush back to China, even with lower duties. “Once bitten, twice shy,” said Hargreaves. “The trend toward supply chain diversification is likely to continue regardless of what happens after the 90 days.”
Nevertheless, for the time being, the deal represents a rare moment of cooperation between two of the world’s most influential nations—an important signal to global markets struggling with inflation, geopolitical risks, and post-pandemic recovery.
The next few months will be critical. Negotiators must now tackle the thorniest issues that have plagued U.S.-China relations for years. That includes not just tariffs and trade balances but also global leadership in emerging technologies and digital governance frameworks. How both sides navigate these challenges will determine whether the current pause leads to progress or simply another cycle of economic brinkmanship.
For consumers, business leaders, and investors alike, the message is clear: the US and China have taken a step toward peace, but the road ahead is long and uncertain. Still, even a temporary break in hostilities offers a chance to regroup—and maybe even to rebuild trust in a global economic system sorely in need of stability.