On May 12, 2025, the United States and China concluded two days of economic and trade talks in Geneva, issuing a joint statement announcing significant reductions in previously imposed tariffs, marking an unexpected turn in the tariff war that has lasted for years. For the first time, the U.S. referred to China as a "trade partner" and committed to revising its tariff policy on Chinese goods. Does this outcome mean the end of the US-China tariff war? This article will analyze the true significance of this event by examining the latest tariff adjustment data, the background of the negotiations, the impact of the results, potential risks, and future prospects, helping you understand the opportunities and challenges presented by the easing of the tariff war.
Background of the Tariff War: From High-Intensity Confrontation to the Negotiation Table
Since the Trump administration initiated the tariff war, US-China trade relations have experienced ups and downs. In April 2025, the Trump administration issued a series of executive orders imposing tariffs of up to 125% on Chinese goods, to which China quickly retaliated with a similar increase to 125%. Below is a specific comparison table of tariff adjustments:
US-China Tariff Adjustment Comparison Table (April 2 to May 12, 2025)
| Date | US Tariff Measures on China | China Tariff Measures on the US | |------------|--------------------------------------------------|------------------------------------------------------| | April 2 | Executive Order No. 14257: 34% tariff increase | Announcement No. 4 of 2025: 34% tariff on US goods (some goods like soybeans have a combined rate of 49%) | | April 8 | Executive Order No. 14259: additional 50% tariff, cumulative rate of 104% | Announcement No. 5 of 2025: tariff rate increased from 34% to 84% | | April 9 | Executive Order No. 14266: an additional 21% tariff, cumulative rate of 125% | Announcement No. 6 of 2025: tariff rate increased to 125% | | May 12 | 1. Suspend 24% tariff (for 90 days) 2. Retain 10% tariff 3. Cancel additional tariffs from April 8 and 9 | 1. Simultaneously suspend 24% tariff (for 90 days) 2. Retain 10% tariff 3. Cancel additional tariffs from announcements No. 5 and 6 |
The high tariffs of the tariff war have led to global supply chain tensions, increased inflation in the U.S., rising consumer prices, and declining orders for Chinese exporters. Internal divisions emerged within the U.S., with Treasury Secretary Scott Bessent advocating for negotiations to ease the situation, while hardliners like Commerce Secretary Howard Lutnick preferred to maintain a high-pressure policy. Meanwhile, China accelerated trade diversification, deepening cooperation with Brazil, ASEAN countries, and reducing reliance on the U.S. On May 6, both sides announced talks in Geneva, with China's representative being Vice Premier He Lifeng and the U.S. represented by Bessent and Trade Representative Jamison Greer.
Negotiation Results: Easing of the Tariff War and New Signals of "Trade Partners"
The joint statement on May 12 pressed the "pause button" on the tariff war. According to the statement, both sides agreed to modify their tariff policies by May 14: the U.S. suspended the 24% additional tariff, retained the 10% baseline tariff, and canceled the additional tariffs from April 8 and 9; China simultaneously suspended the 24% tariff, retained the 10% tariff, and canceled the additional tariffs from announcements No. 5 and 6. Both sides also agreed to establish a mechanism for economic and trade consultations to continue discussing trade issues.
This outcome exceeded market expectations. Following the announcement, the Hong Kong Hang Seng Index rose by 2.98%, U.S. stock futures surged, and shares of American companies like Nvidia and Tesla increased, reflecting market optimism about the easing of the tariff war. For Chinese consumers, the easing of the tariff war means that prices for American products such as smartphones and cars are expected to decline, and exporters will also restore trade stability.
The shift in the U.S. stance is particularly noteworthy. Greer referred to China as a "trade partner," indicating that the agreement would bring "positive changes" to the U.S. Bessent emphasized the "substantive progress" of the negotiations, and Trump described it as a "significant advancement" on the Truth Social platform. The change in terminology from "adversary" to "trade partner" is seen as a signal of the U.S. adjusting its strategy regarding the tariff war. However, the 90-day "observation period" stipulates that the 24% additional tariff is only suspended, and if subsequent negotiations break down, the tariff war may reignite.
Impact of the Easing of the Tariff War: Opportunities and Concerns Coexist
China: Export Recovery and Strategic Initiative
For China, the easing of the tariff war is a tactical victory. The reduction of tariffs to 10% has restored trade stability, alleviated pressure on exporters, and promoted domestic consumption of American goods. China maintained its core interests during the negotiations, not lifting the export controls on rare earths, which poses challenges to the supply chains of U.S. military enterprises and highlights China's initiative in the global industrial chain.
However, the long-term effects of the tariff war remain. For instance, U.S. soybean exports were interrupted due to the tariff war, allowing Brazil to capture the Chinese market, occupying over 20 million tons of trade share. Even if the tariff war ends, it may be difficult for U.S. agriculture to regain its market. The 90-day observation period also adds uncertainty to subsequent negotiations, and businesses need to be wary of the U.S. policy reversals.
- United States: Short-Term Boost and Long-Term Challenges
For the U.S., the easing of the tariff war has temporarily boosted market confidence and alleviated inflationary pressures. However, the core goal of the Trump administration—to reduce the trade deficit—has not been achieved. Economists point out that the tariff war has not changed the structural disadvantages of U.S.-China trade but has instead raised domestic prices. The impact of rare earth controls on U.S. military enterprises continues to unfold, highlighting the vulnerability of their supply chains.
Divisions within the White House cast a shadow over the future direction of the tariff war. The moderates represented by Bessent dominate, but hardliners may push for policy reversals. Trump's "changing orders" style adds further uncertainty.
- Global Impact: The Ripple Effect of Easing the Tariff War
The easing of the tariff war injects confidence into the global economy. The UK previously reached a 10% tariff agreement with the U.S., and the US-China talks further stabilized multilateral trade expectations. However, scholars warn that systemic competition between the U.S. and China is difficult to resolve, and the U.S. may turn to non-tariff measures such as technology blockades to pressure China.
The Deeper Significance of the Tariff War: Easing Rather Than Ending
The success of this meeting stems from both China's strategic resilience and the economic pressures on the U.S. China has forced the U.S. to reassess the costs of the tariff war through trade diversification and rare earth controls. Domestic inflation and risks of international isolation prompted the Trump administration to choose compromise.
However, it is premature to declare the tariff war over. The 90-day observation period signifies the fragility of the agreement, and Trump's policy reversals could reignite hostilities at any time. The term "trade partner" is more a signal from the U.S. to the market and allies rather than a fundamental shift in its strategy towards China. The essence of the tariff war is a contest for dominance in the global industrial chain and geopolitical power, and short-term easing cannot mask the long-term competition.
Future Outlook: Cautious Response to the New Landscape of the Tariff War
The Geneva talks on May 12, 2025, have drawn a "pause" on the tariff war, providing a breather for Chinese enterprises and the global market. For China, maintaining strategic composure, deepening diversification, and enhancing domestic demand resilience are key to addressing the uncertainties of the tariff war. For the U.S., the easing of the tariff war has created space for policy adjustments, but the trade deficit and supply chain challenges still need to be resolved.
In the future, whether the US-China economic and trade consultation mechanism can transform into long-term stability depends on the sincerity and wisdom of both sides. The easing of the tariff war is a glimmer of hope in a chaotic situation, but a truly peaceful trade order will still require time and effort.
Conclusion: The easing of the tariff war opens a new window for US-China relations, but uncertainties remain. Businesses and investors need to closely monitor subsequent negotiation dynamics, seize opportunities, and mitigate risks.
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