Perhaps the most important step in the US-China diplomatic relationship came on May 12, 2025. US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer hold a joint news conference in Geneva to announce a tariff truce between the two countries. This announcement follows a two-day convening held behind closed doors. The hope was to end the lasting trade war that has disrupted our economic relationship since the Trump administration. The deal, which goes into effect on May 14, is a welcome and important step toward cooling the trade war that has resulted in sky-high tariffs in recent years.
Throughout the press briefing, Bessent and Greer pointed out their successes. In their announcement, they in fact referred to their talks with high-level Chinese officials as a model of “significant progress.” The deal cuts tariffs in nearly half on both sides. Tariffs on Chinese goods entering the US will go down from 145% to 30%, and on American goods entering China from 125% to 10%. This three-month stop is an unprecedented shift in the trade battle. It seeks to establish a better economic partnership moving forward.
Mechanisms for Continued Dialogue
According to this new agreement, the US and China are establishing a new mechanism for ongoing dialogue. This short series will examine in particular their growing economic and trade relations. This initiative seeks to ensure that both nations remain engaged in dialogue, addressing any future disputes collaboratively rather than allowing them to escalate into further tariffs or sanctions.
Officials pointed out that this pause is great news and a sign of progress. It does not address the high administration burdens imposed by the perpetual complexity of global trade. Bessent noted, “You don’t want to necessarily negotiate to zero tariffs everywhere… You want to bring cash into the government.” This assertion plays into broader worries on how tariffs can be used as an economic weapon on the global stage.
Yet the decision to pause tariffs leaves a striking gulf between the picture, before each nation’s enormous economic tempest. In 2024, the US trade deficit with China was $295.4 billion, the highest deficit with any bilateral trading partner. The White House characterized the agreement as “a historic trade win for the United States,” reflecting President Donald Trump’s ongoing agenda to address perceived unfair trade practices that have contributed to this imbalance.
The Impact of Trump’s Tariff Agenda
We looked at the major impacts of Trump’s tariff policies on the world of international trade. These tariffs were initially created to bring in revenue to pay for cutting taxes at home. They sought to promote onshoring of industry and added 25% tariffs on all goods from Mexico and Canada, plus reciprocal tariffs on hundreds of other countries.
Economist Steve Blitz remarked, “If you turn it into a microeconomic or a game-theoretic point, there is an optimal tariff price.” This investor-state perspective highlights the political and strategic calculations that underlie the United States’ tariff policies, and the ramifications they could have on global supply chains. As countries navigate this shifting landscape, many analysts note that the current state of affairs represents “an inevitable product of the geopolitical stresses on the global system,” according to Peter Swartz, chief science officer of Altana.
As countries contend with these rising economic pressures, a new multipolar world order seems to be taking shape. Swartz further stated, “Where we think it’s going is you will see that more multipolar world. You’ll see that world in which, fundamentally, the world is fragmenting into blocks.” This ongoing fragmentation further highlights the challenges facing global trade relationships.
A Cautious Optimism Ahead
Both countries have started preparations to implement the tariff suspension. This decision fuels hopeful progressive expectations of improving relations and deepening economic collaboration. However, analysts warn against complacency. Blitz noticed a troubling trend — when the times are good, it’s easy to take things for granted and think everything will always be okay. He remarked, “So, I think we’re in a sweet spot right now, let’s enjoy it… but [to think that] everything’s going to settle down… is probably wrong.”
The pact injected energy into the debate over our trade ties going forward. These discussions, a natural outgrowth of the changing paradigms of global trade, are just the beginning. Many experts, including noted economist and former Treasury Secretary Larry Summers, doubt we’ll go back to free trade, unchained. Instead, they envision burgeoning economies of increased regulation and regulatory complexity.
“But what I can tell you is that it will not look like the previous era of easy global free trade across the entire planet.” – Anonymous Source