On May 12, 2025, the United States and China concluded a two-day trade talk in Geneva, releasing a joint statement announcing a significant drop in previously imposed tariffs, marking an unexpected turn in a tariff war that has lasted for years. For the first time, the U.S. referred to China as a "trading partner" and promised to revise its tariff policy on Chinese goods. Does this outcome mean the end of the U.S.-China tariff war? This article will analyze the true significance of this event by examining the latest tariff adjustment data, covering four aspects: the background of the negotiations, the impact of the results, potential risks, and future prospects, to help you understand the opportunities and challenges of the easing of the tariff war.

Background of the Trade War: From Intense Confrontation to the Negotiation Table

Since the Trump administration initiated the tariff war, Sino-US trade relations have gone through 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 by raising the tariff rate to 125% as well. 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 tariffs from the trade war have led to a tight global supply chain, exacerbating inflation in the United States and causing consumer prices to rise, while Chinese exporters are facing a decline in orders. There are internal divisions within the U.S. government, with Treasury Secretary Scott Bessent advocating for negotiations to ease the situation, while hardliners like Commerce Secretary Howard Lutnick prefer to maintain a high-pressure policy. On the Chinese side, there is an acceleration in diversifying trade and deepening cooperation with countries like Brazil and ASEAN to reduce dependence on the U.S. On May 6, both sides announced talks in Geneva, with the Chinese representative being Vice Premier He Lifeng and the U.S. representatives being Bessent and Trade Representative Jamison Greer.

Negotiation Results: Tariff War Drops and New Signals from "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 United States 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 Announcement No. 5 and No. 6. Both sides also agreed to establish an economic and trade consultation mechanism to continue discussing trade issues.

This achievement 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 regarding the easing of the trade war. For Chinese consumers, the de-escalation of the trade war means that prices for American goods such as mobile phones and cars are expected to drop, and exporters will also regain trade stability.

The change in the U.S. attitude is particularly noteworthy. Greer referred to China as a "trading partner" and stated that the agreement would bring "positive changes" to the U.S. Bassett emphasized the "substantial progress" in negotiations, and Trump also called it a "significant progress" on the Truth Social platform. The shift in wording from "rival" to "trading partner" is seen as a signal of the U.S. adjusting its 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 could reignite.

The Impact of Easing Trade Wars: Opportunities and Concerns Coexist

China: Export Recovery and Strategic Initiative

For China, the easing of the tariff war is a tactical victory. The drop in tariffs to 10% has restored trade stability, alleviating pressure on exporters and promoting domestic consumption of American goods. China has firmly upheld its core interests during negotiations, not lifting restrictions on rare earth exports, which poses challenges to the supply chain of U.S. defense companies and highlights China's initiative in the global industrial chain.

However, the long-term effects of the tariff war are still ongoing. For example, U.S. soybean exports have been interrupted due to the tariff war, allowing Brazil to seize the Chinese market, occupying over 20 million tons of trade share. Even if the tariff war ends, it will be difficult for U.S. agriculture to regain the market. The 90-day observation period also adds uncertainty to subsequent negotiations, and companies need to be wary of the fluctuations in U.S. policies.

USA: Short-term Boost and Long-term Challenges

For the U.S., the easing of the tariff war has boosted market confidence and alleviated inflationary pressures in the short term. 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 failed to change the structural disadvantages of U.S.-China trade, instead driving up domestic prices. The impact of rare earth controls on U.S. military-industrial firms continues to ferment, highlighting the vulnerability of their supply chains.

The internal divisions within the White House cast a shadow over the future direction of the tariff war. The moderate faction represented by Bessent is dominant, but hardliners may push for policy reversals. Trump's style of "changing orders from morning to evening" adds to the uncertainty.

Global Impact: The Ripple Effect of Easing Trade Wars

The easing of the tariff war injects confidence into the global economy. The UK previously reached a 10% tariff agreement with the US, and the China-US talks further stabilized multilateral trade expectations. However, scholars warn that the systemic competition between China and the US is difficult to resolve, and the US may turn to non-tariff measures such as technology blockades to pressure China.

The Deeper Meaning of the Trade War: Easing Rather Than Ending

The success of this dialogue stems from the dual effects of China's strategic resilience and the economic pressure from the United States. China has forced the U.S. side to reassess the costs of the tariff war through means such as diversified trade and rare earth control. Domestic inflation and the risk of international isolation prompted the Trump administration to choose compromise.

However, it is too early to say that the tariff war is over. The 90-day observation period means the fragility of the agreement, and Trump's policy repetition could reignite the flames of war at any time. The term "trading partner" is more of a signal from the US to the market and allies than a fundamental shift in its strategy toward China. The essence of the tariff war is a contest of global industrial chain and geopolitical dominance, and short-term relaxation can hardly cover up long-term competition.

Future Outlook: Cautiously Responding to the New Landscape of the Tariff War

The Geneva talks on May 12, 2025, marked a "pause" in the tariff war, providing respite for Chinese and American enterprises as well as the global market. For China, maintaining strategic composure, deepening diversified layouts, and enhancing the resilience of domestic demand are key to coping with the uncertainties of the tariff war. For the United States, the easing of the tariff war has granted it space to adjust policies, but trade deficits and supply chain challenges still need to be addressed.

In the future, whether the China-US economic and trade consultation mechanism can be transformed into a long-term stability depends on the sincerity and wisdom of both parties. The easing of the tariff war is a glimmer of hope in the chaos, but a truly peaceful trading order still requires time and effort.

Conclusion:

The easing of the trade war opens a new window for China-U.S. relations, but uncertainty remains. Businesses and investors need to closely monitor the dynamics of subsequent negotiations, seize opportunities, and avoid risks.