#TradeWarEases

Recent developments in the U.S.-China trade war suggest a potential de-escalation. Top officials from both nations met in Geneva, Switzerland, starting May 10, 2025, to address the trade conflict sparked by President Trump's tariffs, which imposed a 145% duty on Chinese goods, prompting China's 125% retaliatory tariffs. Trump described the talks as a “total reset” in trade relations, with U.S. Treasury Secretary Scott Bessent reporting “substantial progress” and China's Vice Premier He Lifeng calling the discussions “candid” and significant for global economic stability.

Key points:

• The U.S. aims to reduce its $295 billion trade deficit with China and push for changes in China’s economic model, while China seeks lower U.S. tariffs and clarity on desired imports.

• Reports indicate the U.S. may lower tariffs to around 60%-80%, with China considering exemptions on certain U.S. goods to ease tensions.

• Financial markets reacted positively, with U.S. stock futures rising on hopes of avoiding a worst-case scenario.

• Analysts remain cautious, expecting a “ceasefire” rather than a full resolution, with non-trade issues like fentanyl and geopolitics complicating talks.

While progress is noted, distrust persists, and a comprehensive deal remains uncertain. The talks, continuing into May 12, 2025, are a critical step, but both sides face domestic pressures and differing priorities.