Summary
The China–United States trade deal reached in May 2025 represents a significant milestone in the protracted economic conflict between the world’s two largest economies. Emerging after years of escalating tensions marked by a damaging trade war initiated under the Trump administration, the agreement established a 90-day tariff reduction period aimed at easing trade barriers and revitalizing bilateral commerce. The deal followed intense negotiations in Geneva involving senior officials from both countries and was hailed by Chinese leadership as a major diplomatic and economic victory. It is notable for temporarily halting the punitive tariffs that had disrupted global supply chains, increased costs for businesses and consumers, and fueled financial market volatility.
The trade war, characterized by reciprocal tariffs and export controls, had severely strained U.S.-China relations, exacerbating concerns about national security, trade imbalances, and economic decoupling. While the 2025 deal was welcomed as a constructive step toward de-escalation, analysts and policymakers cautioned that it was a preliminary arrangement that did not fully resolve underlying structural issues such as China’s export-driven economic model and ongoing disputes over intellectual property and labor standards. Both sides agreed to establish ongoing consultation mechanisms, signaling a commitment to continued dialogue amid persistent uncertainties about the durability of the accord.
Within China, the agreement sparked widespread public and official celebrations, with state media framing it as a vindication of Beijing’s firm negotiation tactics and a demonstration of national resilience under external pressure. Conversely, in the United States, the deal received mixed reactions; while some praised the easing of economic tensions, labor unions and progressive lawmakers criticized the agreement for insufficiently addressing concerns related to environmental protections, labor rights, and fair trade practices. These controversies underscore the complex political and economic dynamics that continue to shape U.S.-China trade relations.
Overall, the 2025 trade deal marks a tentative but important de-escalation in a conflict that has had profound implications for global markets and international diplomacy. While it offers temporary relief to businesses affected by tariffs and signals a willingness for cooperation, the broader challenges of balancing economic interests, addressing systemic trade issues, and maintaining geopolitical stability remain unresolved.
Background
The U.S.-China trade relationship had been marked by escalating tensions culminating in a trade war that significantly disrupted global markets. Beginning with the imposition of substantial tariffs by the United States under the Trump administration, the conflict aimed to address what Washington characterized as an unbalanced trade relationship and national security concerns related to China’s trade practices. These tariffs, which saw rates increase sharply throughout April, led to a near paralysis of trade between the two largest economies and caused price surges that were felt by American consumers and small businesses, who faced more than doubling costs on orders from China.
The trade war also fueled a rise in Chinese nationalism, with the Chinese Communist Party leveraging external pressure as a means to consolidate domestic support. Chinese leadership, including President Xi Jinping, cited U.S. actions as contributing factors to the country’s economic slowdown, thereby framing the trade dispute as part of a broader geopolitical struggle. Amid these tensions, shipments across the Pacific declined markedly, and financial markets experienced volatility, with some investors betting on a potential truce to spur recovery in shipping and trade volumes.
Despite the strain, both sides engaged in high-stakes negotiations that concluded positively in May 2023. U.S. officials, represented by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, described “substantial progress” and hinted at a deal intended to reduce the U.S. trade deficit and resolve national security concerns. Chinese officials emphasized the achievement of “important consensus” and the establishment of a new economic dialogue forum, with Vice Premier He Lifeng promising a joint statement that would bring “good news for the world”. The announcement was met with optimism in financial markets across Asia, reflecting hopes for a de-escalation of the conflict and a path toward more stable trade relations.
Chinese state media and officials framed the initial agreement and the accompanying 90-day tariff pause as a vindication of Beijing’s negotiating approach, calling for the U.S. to fully correct its unilateral tariff practices to sustain progress. The complex interplay of economic pressures, political narratives, and diplomatic efforts set the stage for the trade deal celebrated as a major victory in China.
The Trade Deal
In May 2025, the United States and China reached a significant breakthrough in their long-standing trade tensions with an initial agreement to drastically reduce tariffs on each other’s goods for a 90-day period. This surprise development followed marathon negotiations held in Geneva, Switzerland, involving top officials including U.S. Secretary of the Treasury Scott Bessent, U.S. Trade Representative Jamieson Greer, and Chinese Vice Premier He Lifeng. Both sides expressed optimism about the “substantial progress” made and committed to continued communication and cooperation to resolve remaining issues.
The agreement marked a de-escalation of the punishing trade war that had severely disrupted trade flows and increased costs for businesses and consumers on both sides. Prior to the deal, retaliatory tariffs had sharply raised prices, effectively paralyzing bilateral trade between the world’s two largest economies. The reduction in tariffs was seen as an initial step toward a broader and more comprehensive trade agreement, with expectations that tariff rates would continue to decline as negotiations progressed over the coming months.
Despite the positive tone, analysts and critics cautioned that the deal was preliminary and that detailed terms still needed to be finalized in the coming weeks. Observers noted that the agreement did not fundamentally rebalance the global economic roles of China as a manufacturing hub and the U.S. as a consumption economy. The Trump administration’s goal for China to significantly increase purchases of American goods, reminiscent of a 2020 trade deal that ultimately fell short, remained a key but challenging aspect of ongoing discussions.
To ensure continued dialogue, the two countries agreed to establish a consultation mechanism aimed at addressing trade issues going forward, with negotiations to be conducted alternately in China, the United States, or a mutually agreed third country. While the deal was hailed as a diplomatic success that eased immediate tensions and boosted global markets, opposition from some U.S. labor unions and congressional Democrats highlighted ongoing concerns about China’s labor and environmental standards, which critics argued could incentivize a “race to the bottom” in global trade practices.
Impact of the Deal
The trade deal between the United States and China marked a significant moment in their prolonged economic conflict, bringing cautious optimism to global financial markets that had been unsettled by the trade war’s disruptions. The agreement, reached during meetings in Geneva, was described as a constructive outcome aimed at reducing the U.S. trade deficit with China, which stood at approximately $1.2 trillion in global goods trade. The rapid progress in negotiations suggested that the differences between the two countries might not have been as vast as initially perceived.
Economically, the trade war had already inflicted tangible damage on both countries. China’s exports to the U.S. experienced a sharp decline, with outbound shipments dropping 21% in April 2024 compared to the previous year, signaling the intense impact of tariffs on bilateral trade flows. In the United States, shipping volumes from China fell significantly, affecting supply chains and causing price increases for consumers and businesses alike. The trade war also triggered broader concerns about a potential economic “decoupling,” as many American companies began relocating supply chains to other parts of Asia to mitigate risks.
The deal has been viewed as a relief particularly for small and medium-sized enterprises on both sides of the Pacific, many of which had struggled amid the escalating tariffs and retaliatory measures. Industry stakeholders, such as Danish shipping giant A.P. Moller-Maersk, welcomed the agreement’s temporary tariff reprieve as a positive step toward creating the long-term predictability needed for stable business operations. However, some experts remained cautious, noting that the tariff reductions were temporary and could be reversed if negotiations deteriorated.
Beyond immediate trade impacts, the deal also highlighted the larger context of the intertwined economic relationship between the U.S. and China, two of the world’s largest economies. Together, they accounted for 43% of the global GDP and nearly half of global manufacturing output in 2023, underscoring the far-reaching implications of their trade policies on the global economy. Despite the agreement, the longstanding trade imbalance—where the U.S. imports significantly more from China than it exports—remained a key point of contention and a motivating factor for the original tariffs.
While the deal signaled a tentative easing of tensions, it also reflected the complex and ongoing challenges in U.S.-China trade relations. Both governments acknowledged the importance of their bilateral relationship for global economic stability, but uncertainty persisted regarding the durability of the agreement and the future trajectory of trade negotiations. Nonetheless, the truce provided a temporary boost to markets and businesses, raising hopes for a gradual normalization of trade activities after a period marked by disruption and volatility.
Political Significance
The trade deal between the United States and China marked a significant political milestone, reflecting both nations’ recognition of the importance of their bilateral economic and trade relationship to the global economy. The agreement was reached after intense negotiations in Geneva, where U.S. officials emphasized the deal’s potential to address the national emergency declared by the previous U.S. administration due to unbalanced trade. The rapid progress toward agreement suggested that the differences between the two sides were perhaps not as large as initially perceived.
From the Chinese perspective, the deal was celebrated as a major victory, reinforcing China’s position as a responsible global trading partner despite ongoing criticisms regarding its negotiating tactics and concerns about the trade war’s global repercussions. Chinese officials highlighted the achievement of “important consensus” and the launch of a new economic dialogue forum as positive outcomes of the talks, which were described as substantive and cooperative. Public sentiment in China, as seen in social media reactions, reflected national pride and a determination not to concede ground in the negotiations.
The deal also held domestic political implications within the United States. While it was welcomed by some as a step toward resolving trade imbalances and reducing tariffs, it faced opposition from labor unions and certain congressional Democrats concerned about China’s labor and environmental standards. Nonetheless, U.S. officials expressed confidence that the agreement would help to alleviate the economic tensions previously deemed a national emergency, signaling a potential thaw in one of the most contentious trade relationships in recent history.
Celebrations and Public Reactions in China
Following the announcement of the initial trade agreement and the 90-day tariff pause between China and the United States, Chinese officials, influencers, and state-run media hailed the outcome as a significant victory and a validation of Beijing’s tough negotiating strategy. Chinese commentators emphasized that the country’s firm and defiant public posture during negotiations played a crucial role in securing the deal with relatively few concessions. A social media account linked to China’s national broadcaster CCTV stated, “China’s firm countermeasures and resolute stance have been highly effective,” reflecting a widespread sentiment of national pride.
Within China, public opinion largely supported the government’s approach to the trade talks. A popular social media post by user Chun Feng Yi Ran encapsulated the patriotic mood, stating, “Our ancestors didn’t cave in, why should we give up what we have?” This comment received thousands of likes, illustrating strong popular endorsement of China’s negotiation tactics. The public perceived the agreement as a substantial rollback of the previously imposed U.S. tariffs, which had reached rates as high as 145% and were reportedly reduced to around 30% following the deal.
Beyond domestic acclaim, Beijing sought to use the trade agreement to reinforce its image on the global stage as a responsible trading partner. This messaging aimed to counter longstanding international criticism of China’s state-driven and export-oriented economic model, which has often been a source of frustration for global business and trade partners. Overall, the positive public and official response highlighted a sense of achievement and resilience in the face of intense economic pressure from the United States.
Criticism and Controversies
The US-China trade deal, while hailed by officials as a constructive breakthrough, has faced significant criticism and controversy from various quarters. Critics argue that the deal falls short of addressing the fundamental issues underlying the trade imbalance and economic tensions between the two countries.
One major point of contention concerns the effectiveness of the tariffs and whether they achieved their intended goals. Despite President Trump’s assertion that tariffs would reduce the US trade deficit, bring back manufacturing jobs, and compel China to reform unfair trade practices such as intellectual property theft, many of these promises remained unfulfilled. China retaliated with its own tariffs and export controls on critical minerals vital for industries including automotive, semiconductor, and military manufacturing, exacerbating global supply chain disruptions.
Furthermore, some observers have questioned the timing and strategy behind the trade negotiations. Secretary Bessent defended the approach of triggering tariffs before engaging in negotiations, stating that a “business as usual” method would not have succeeded in rebalancing trade. However, this strategy caused significant global financial turmoil and uncertainty, contributing to stock market instability and economic damage beyond the US and China, affecting third-party countries as well.
Concerns have also been raised about the scope of the deal, with critics noting that while discussions reportedly covered issues such as fentanyl precursor controls and non-tariff barriers, key structural reforms to China’s state-dominated, export-driven economic model remain elusive. Longstanding US goals of shifting China toward a consumer-driven economy were not substantially advanced by the agreement, leading to skepticism about the durability and depth of the progress made.
Lastly, some experts highlighted the unpredictability of the ongoing US-China trade relationship, with fluctuating tariff rates—such as President Trump’s willingness to reduce tariffs to 80% being subject to negotiation dynamics—reflecting persistent tensions and uncertainty about the future path of trade policy between the two nations. This volatility has made it difficult for businesses and markets to plan effectively, undermining confidence despite the positive rhetoric following the talks.
In sum, while the trade deal was presented as a milestone, significant criticism remains regarding its ability to deliver lasting solutions to the complex economic and geopolitical challenges underlying the US-China trade conflict.
Future Prospects
The recent trade deal between China and the United States marks a significant step toward de-escalating one of the most consequential trade conflicts of recent decades. Both sides have expressed optimism about the potential for this agreement to pave the way for more comprehensive negotiations aimed at reducing tariffs further and stabilizing bilateral trade relations. The initial 90-day tariff rollback has already been recognized as a positive move by global market observers and businesses, including major shipping companies, which hope the agreement will bring the long-term predictability necessary for smoother commerce.
Despite this progress, experts remain cautious about the broader implications of the deal on the fundamental structure of the global economy. Analysts note that the underlying economic relationship between the two countries—where China remains a dominant manufacturing hub and the U.S. a major consumer economy—is unlikely to shift dramatically in the near future. The ongoing dialogues and consultation mechanisms established through the agreement are expected to continue addressing specific trade and economic issues but may fall short of altering China’s export-driven, state-centered economic model.
Moreover, the deal offers some relief to small and medium-sized businesses on both sides, many of which had suffered from the tariff escalation’s impact on trade costs and supply chains. The easing of tariffs is anticipated to help these businesses regain footing and contribute to a more balanced economic engagement between the two nations. However, uncertainty remains regarding the timeline for substantive reductions in demand and emissions related to production, especially in sectors such as oil and gas, which are integral to both economies’ environmental commitments.
Comparison with Previous China–US Trade Negotiations
The recent trade deal between China and the United States marks a continuation of efforts reminiscent of the negotiations during the Trump administration’s trade war in 2020. At that time, the U.S. aimed to secure China’s commitment to purchase an additional $200 billion worth of American goods; however, China ultimately failed to meet this purchasing target. Unlike the earlier attempts, the current deal is viewed as occurring when China holds a psychologically stronger position, which may influence the negotiation dynamics and outcomes.
Despite the lower tariff rate on Chinese imports now standing at 30%, the United States continues to regard the tariffs as significant leverage in the trade relationship[4
The content is provided by Blake Sterling, Fact-Nest
