On May 12, 2025, the two countries concluded a two-day economic and trade meeting in Geneva, issuing a joint statement to announce a significant reduction in previously imposed tariffs, marking an unexpected turning point in the years-long trade war. For the first time, the U.S. referred to China as a 'trading partner' and promised to modify its tariff policies on Chinese goods. Does this achievement mean the end of the Sino-U.S. trade war? This article will analyze the real significance of this event from four aspects: negotiation background, impact of the results, potential risks, and future outlook, helping you see the opportunities and challenges of the trade war’s easing.
Background of the Trade War: From High-Intensity Confrontation to the Negotiating Table
Since the Trump administration sparked the trade war, Sino-U.S. trade relations have experienced ups and downs. In April 2025, the Trump administration issued a series of executive orders imposing tariffs as high as 125% on Chinese goods, to which China swiftly retaliated with tariffs also raised to 125%. Below is a comparison table of the specific tariff adjustments:
Comparison Table of Sino-U.S. Tariff Adjustments (April 2 to May 12, 2025)
Time U.S. Tariff Measures on China China Tariff Measures on the U.S. April 2 Executive Order No. 14257: Impose a 34% Tariff Tax Committee Announcement No. 4 of 2025: Impose a 34% Tariff on U.S. Goods (for some goods such as soybeans, the overall tax rate reaches 49%) April 8 Executive Order No. 14259: Additional 50% Tariff, Cumulative Tax Rate Reaches 104% Tax Committee Announcement No. 5 of 2025: Tariff Rate Raised from 34% to 84% April 9 Executive Order No. 14266: Additional 21% Tariff, Cumulative Tax Rate Reaches 125% Tax Committee Announcement No. 6 of 2025: Tariff Rate Raised to 125% May 12 1. Suspend 24% Tariff (90 days) 2. Retain 10% Tariff 3. Cancel Additional Tariffs from April 8 and 9 1. Simultaneously Suspend 24% Tariff (90 days) 2. Retain 10% Tariff 3. Cancel Additional Tariffs from Announcement No. 5 and 6 in April
The high tariffs from the trade war have led to a tightening of global supply chains, escalating inflation in the U.S., rising consumer prices, and a decline in orders for Chinese exporters. Internal divisions have emerged in the U.S., with Treasury Secretary Scott Bessent advocating for a negotiated resolution, while hardliners like Commerce Secretary Howard Lutnick prefer to maintain high-pressure policies. China is accelerating trade diversification, deepening cooperation with countries like Brazil and ASEAN to reduce reliance on the U.S. On May 6, both sides announced talks to be held in Geneva, with Chinese representatives led by Vice Premier He Lifeng and American representatives being Bessent and Trade Representative Jamison Greer.
Negotiation Results: Easing of the Trade War and New Signals of 'Trading Partner'
The joint statement on May 12 pressed the 'pause button' on the trade war. According to the statement, both sides will modify their tariff policies by May 14: the U.S. will suspend the additional 24% tariff, retain a 10% baseline tariff, and cancel the additional tariffs imposed on April 8 and 9; China will simultaneously suspend the 24% tariff, retain the 10% tariff, and cancel the additional tariffs from announcements 5 and 6.
This result exceeded market expectations. After the announcement, the Hong Kong Hang Seng Index rose by 2.98%, U.S. stock futures surged, and the stock prices of American companies like Nvidia and Tesla increased, reflecting the market's optimistic sentiment toward the easing of the trade war. For Chinese consumers, a de-escalation of the trade war means that prices of American goods such as phones and cars are expected to drop, and exporters will also regain trade stability.
The shift in the U.S. stance is particularly noteworthy. Greer referred to China as a 'trading partner,' indicating that the agreement will bring 'positive changes' to the U.S. Bessent emphasized 'substantial progress' in negotiations, and Trump also called it a 'major progress' on the Truth Social platform. The change in wording from 'adversary' to 'trading partner' is seen as a signal of the U.S. adjusting its strategy in the trade war. However, the 90-day 'observation period' means that the additional 24% tariff is merely paused, and if subsequent negotiations break down, the trade war could reignite.
The Impact of Easing the Trade War: Opportunities and Concerns Coexist
China: Export Recovery and Strategic Initiative
For China, the easing of the trade 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 has upheld its core interests in negotiations, without lifting the controls on rare earth exports, which poses a challenge to the supply chains of U.S. military enterprises, highlighting China's leverage in the global industrial chain.
However, the long-term effects of the trade war are still evident. For example, U.S. soybean exports were interrupted due to the trade war, allowing Brazil to seize the Chinese market, occupying over 20 million tons of trade share. Even if the trade war ends, American agriculture is unlikely to regain its market. The 90-day observation period also adds uncertainty to subsequent negotiations, and companies need to be wary of U.S. policy reversals.
U.S.: Short-Term Boost and Long-Term Challenges
For the U.S., the easing of the trade war has temporarily boosted market confidence and alleviated inflationary pressures. However, the core objective of the Trump administration—to reduce the trade deficit—has not been achieved. Economists point out that the trade war has failed to change the structural disadvantages of U.S. trade with China and has instead pushed domestic prices higher. The impact of rare earth controls on U.S. military enterprises continues to amplify, highlighting their supply chain vulnerabilities.
The internal divisions within the White House cast a shadow over the future direction of the trade war. The moderates represented by Bessent hold a dominant position, but hardliners may push for policy reversals. Trump's 'day-to-day changes' style adds further uncertainty.
Global Impact: Chain Reactions from the Easing of the Trade War
The easing of the trade war injects confidence into the global economy. Previously, the U.K. reached a 10% tariff agreement with the U.S., and the Sino-U.S. talks further stabilized multilateral trade expectations. However, scholars warn that the systemic competition between China and the U.S. is difficult to resolve, and the U.S. may shift to non-tariff means such as technology blockades to pressure China.
The Deeper Significance of the Trade War: Easing Rather Than Ending
The success of this meeting stems from the dual effects of China's strategic resilience and U.S. economic pressure. China has forced the U.S. to reassess the costs of the trade war through trade diversification and rare earth controls. Inflation and risks of international isolation at home prompted the Trump administration to choose compromise.
However, it is too early to say that the trade war has ended. The 90-day observation period indicates the fragility of the agreement, and Trump's policy reversals could reignite the conflict at any time. The term 'trading partner' is more a signal released by the U.S. to the market and allies rather than a fundamental change in its strategy toward China. The essence of the trade war is a contest for dominance in global supply chains and geopolitical power; short-term easing cannot mask long-term competition.
Future Outlook: Cautious Response to the New Landscape of the Trade War
The Geneva talks on May 12, 2025, marked a 'pause' in the trade war, providing a breather for Sino-U.S. enterprises and global markets. For China, maintaining strategic composure, deepening diversified layouts, and enhancing domestic consumption resilience are key to addressing the uncertainties of the trade war. For the U.S., the easing of the trade war has created space for policy adjustments, but issues of trade deficits and supply chain challenges still need resolution.
In the future, whether the Sino-U.S. economic and trade consultation mechanism can transform into long-term stability depends on the sincerity and wisdom of both sides. The easing of the trade war is a ray of hope amid the chaos, but a truly peaceful trading order will still require time and effort.
Conclusion: The easing of the trade war opens a new window for Sino-U.S. relations, but uncertainties remain. Companies and investors need to closely monitor subsequent negotiation dynamics, seize opportunities, and mitigate risks.