On May 12, 2025, China and the U.S. concluded a two-day economic and trade meeting in Geneva, issuing a joint statement announcing a significant reduction of the previously imposed tariffs, marking a surprising turn in the ongoing tariff war lasting several years. For the first time, the U.S. referred to China as a 'trade partner' and committed to modifying its tariff policies on Chinese goods. Does this result mean that the Sino-U.S. tariff war has come to an end? This article will analyze the true significance of this event from four aspects: negotiation background, outcome impact, potential risks, and future outlook, allowing you to see the opportunities and challenges brought by the easing of the tariff war.
Background of the Tariff War: From High-Intensity Confrontation to the Negotiation Table
Since the Trump administration instigated the tariff war, Sino-U.S. trade relations have gone through ups and downs. In April 2025, the Trump administration continuously issued executive orders imposing tariffs as high as 125% on Chinese goods, to which China quickly retaliated with the same tariff rate of 125%. Below is a specific comparison table of tariff adjustments: Comparison Table of Sino-U.S. Tariff Adjustments (April 2, 2025, to May 12, 2025)
The high tariff rates from the tariff war have led to global supply chain tensions, exacerbated U.S. inflation, increased consumer prices, and left Chinese exporters facing a decline in orders. There were divisions within the U.S. administration, with Treasury Secretary Scott Bessent advocating for a negotiated resolution while hardliners like Commerce Secretary Howard Lutnick preferred to maintain pressure. Meanwhile, China accelerated trade diversification and deepened cooperation with countries like Brazil and ASEAN to reduce dependence 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. side 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 will modify their tariff policies by May 14: the U.S. will suspend the additional 24% tariff, retain the 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 Notices No. 5 and 6. Both sides also agreed to establish a mechanism for economic and trade consultations to continue discussing trade issues. This result exceeded market expectations. After the statement was released, the Hong Kong Hang Seng Index rose by 2.98%, U.S. stock futures soared, and shares of U.S. companies such as 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 of U.S. goods like smartphones and cars are expected to fall, and exporters will also restore trade stability. The shift in the U.S. attitude is particularly noteworthy. Greer referred to China as a 'trade partner,' stating that the agreement would bring 'positive changes' to the U.S. Bessent emphasized the 'substantive progress' in negotiations, and Trump also referred to it as a 'significant progress' on the Truth Social platform. The change in wording from 'adversary' to 'trade partner' is seen as a signal of the U.S. adjustment in tariff war strategy. However, the 90-day 'observation period' stipulates that the additional 24% tariff is only suspended, and if subsequent negotiations break down, the tariff war may reignite.
The Impact of Easing the Tariff War: Opportunities and Concerns Coexist
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 market consumption of U.S. goods. China adhered to its core interests in negotiations and did not lift the rare earth export controls, which poses a challenge to the supply chain of U.S. military companies, highlighting China's initiative in the global industrial chain. However, the long-term impact of the tariff war is still ongoing. For example, U.S. soybean exports were interrupted by the tariff war, and Brazil seized the Chinese market, taking 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 companies need to be wary of the U.S. policy's volatility.
The U.S.: 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 rather raised domestic prices. The impact of rare earth controls on U.S. military enterprises continues to ferment, highlighting their supply chain vulnerabilities. Divisions within the White House cast shadows over the future direction of the tariff war. The moderates represented by Bessent dominate, but hardliners may push for policy fluctuations. Trump's 'shifting policies' 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 U.K. previously reached a 10% tariff agreement with the U.S., and Sino-U.S. talks further stabilized multilateral trade expectations. However, scholars warn that systematic competition between China and the U.S. is difficult to dissolve, and the U.S. may resort to non-tariff measures such as technology blockades to pressure China.
The Deep Significance of the Tariff War: Easing Rather Than Ending
The success of this talk 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 tariff war through trade diversification and rare earth controls. Domestic inflation and the risk of international isolation prompted the Trump administration to choose compromise. However, it is too early to declare the end of the tariff war. The 90-day observation period indicates the fragility of the agreement, and Trump's policy volatility may reignite the flames of conflict at any time. The term 'trade partner' is more a signal released by the U.S. for the market and allies rather than a fundamental shift in strategy toward China. The essence of the tariff war is a contest for control over global industrial chains and geopolitical dominance, and short-term easing cannot conceal long-term competition.
Future Outlook: Cautiously Responding to the New Pattern of the Tariff War
The Geneva talks on May 12, 2025, drew a 'pause' in the tariff war, providing a breather for Chinese enterprises and the global market. For China, maintaining strategic determination, 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 given it space to adjust its policies, but trade deficits and supply chain challenges still need to be resolved. 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 tariff war is a ray of light in chaos, but a truly peaceful trade order still requires time and effort. Conclusion: The easing of the tariff war opens a new window for Sino-U.S. relations, but uncertainty remains. Enterprises and investors need to closely monitor subsequent negotiation dynamics, seize opportunities, and avoid risks.
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