The recent
de-escalation of trade tensions between China and the United States, marked by
a mutual reduction of tariffs, is a major development in global economics.
1. HOW
1) Negotiation
Rounds: Trade officials from both countries likely engaged in extensive
diplomatic talks behind closed doors, exchanging proposals and concessions.
2) Agreement
on Tariff Reductions: A phased reduction in tariffs was probably agreed
upon, targeting key sectors (e.g., agriculture, tech, manufacturing).
3) Public
Announcements and Policy Changes: Both governments made coordinated
announcements, possibly issuing official decrees or modifying customs
schedules.
4) Monitoring
and Review: Mechanisms may be in place to monitor compliance and
re-evaluate tariffs in case of disputes or economic shifts.
2. WHY
1) Economic
Slowdown Risks: Both economies have felt the strain, higher costs for
businesses, inflation, and supply chain disruptions.
2) Global
Pressure: The IMF, WTO, and global investors often urge the world’s two
largest economies to cooperate for global economic stability.
3) Political
Calculations: Leaders may aim to secure domestic support or prepare for
elections by easing tensions.
4) Supply
Chain Security: Companies and governments want more predictable access to
goods and materials.
3. ECONOMY
3.1 Positive
a) Trade
Growth: Lower tariffs make goods cheaper, boosting import/export volume
between the two countries.
b) Reduced
Costs: Businesses save money on raw materials and components, improving
margins or reducing prices.
c) Market
Confidence: Investors view the easing of tensions as a sign of stability,
boosting stock markets.
d) Inflation
Control: Lower import costs can ease consumer prices, helping central banks
manage inflation.
Global
Spillover Effects
e) Revived
Global Trade: Other economies benefit from more fluid trade routes and
reduced global uncertainty.
f) Currency
Stabilization: Less volatility in the yuan and dollar helps stabilize
emerging market currencies.
g) Investment
Recovery: Global investors may resume or expand investments in both Chinese
and U.S. markets.
3.2 Potential
Risks
a) Uneven
Gains: Some domestic industries (especially those previously protected by
tariffs) might face new competition.
b) Geopolitical
Complexity: While tariffs ease, tech and military tensions may continue in
other forms.
4. ONLY FOR
90 DAYS?
Whether the
U.S.- China tariff de-escalation lasts only 90 days or becomes a continual
process depends on several key factors:
4.1 If 90
days
a) Allow time
for further negotiations.
b) Monitor
initial compliance.
c) Defer
harsher measures while assessing political and economic reactions.
Such a truce
typically includes benchmarks both sides must meet (e.g., increased
purchases, IP enforcement, transparency). If either side fails, tariffs
could return or escalate.
4.2 If
Continual
It will require:
a) A signed
trade agreement or treaty with defined terms.
b) Long-term
policy alignment on key issues like technology transfer, market access, and
subsidies.
c) Mutual
political will, especially through leadership transitions or election cycles.
If this current
easing is part of a trial period, it's likely to last 90 days, with potential
to extend. However, if both parties see strategic benefit, it could evolve into
a more stable, ongoing trade relationship.
5. UNCHANGED
TARIFFS
Automobiles
& Auto Parts, Pharmaceuticals, Aluminum & Steel (Section 232
Tariffs)
These
exclusions do still affect the economy, despite overall tariff reductions in
other sectors.
5.1 Impact on Other Countries
5.2 Global
Trade Dynamics
- Trade Diversion: Countries not facing tariffs (like Vietnam or Mexico) might see increased demand.
- WTO Role: Allies may press the U.S. at WTO for consistent, rules-based trade policies.
- Investment Hesitancy: Companies may still hesitate to invest if tariffs on key inputs persist.
Even with partial tariff relief, leaving out major sectors
like autos, pharmaceuticals, and metals keeps significant economic friction in
place. The global response (especially from allies) will depend on
whether the U.S. extends tariff relief beyond China or maintains a fragmented
approach.
5.3 Why Keep Tariffs on Pharmaceuticals, Automobiles,
and Aluminum/Steel?
Trump argued that leaving these tariffs in place serves one
core purpose:
To bring manufacturing and strategic industries
back to the U.S.
("If it's made in America, it's better for our jobs,
our national security, and our
independence.")
5.4 Can This Be Done Without Hurting the U.S. Economy?
Here’s where economists are divided, because while tariffs protect jobs, they also come with costs.
Bottom Line - Can it be done without economic impact?
Not entirely. There will always be trade-offs.
But Trump's approach is to accept short-term consumer pain or cost increases in return for long-term gains in industrial capacity, jobs, and strategic autonomy.
It's a "rebuild-from-within" philosophy (protectionist), but aimed at revitalizing U.S. self-sufficiency.
5.5 Global Impact Matrix

6.0 THE 2019 “GOOD DEAL” THAT WENT SOUTH
I believe it's important to revisit the 2019 U.S.- China trade deal, during which both countries were engaged in months of intensive negotiations aimed at resolving ongoing trade tensions
US stated that it was “great deal” reached or was close to being finalized that would:
- Open China's markets further to U.S. companies ("Open China" - which in the recent 2025 deal, China is said still thinking about it)
- Increase Chinese purchases of U.S. goods (esp. agriculture and energy)
- Protect U.S. intellectual property
- End forced technology transfer for American firms
- Include enforceable mechanisms to ensure compliance
In the final stage, US said that China revised key parts of the draft agreement.
They allegedly removed commitments related to enforcement, IP protection, and structural reforms (e.g., subsidies, state-owned enterprises).
Trump called this a “reneging” on a nearly finalized deal and responded by raising tariffs (e.g., from 10% to 25% on $200 billion worth of goods).
6.1 China’s Perspective (2019)
- The U.S. demands were too intrusive, especially demands for changes to sovereign laws.
- They wanted a more balanced deal, with tariff rollbacks included in exchange for concessions.
- The U.S. side, in their view, kept shifting goalposts.
China was reportedly even during that time - willing to buy more U.S. goods, but resisted deeper structural reforms, especially changing domestic laws and accepting unilateral U.S. enforcement mechanisms
And with tariffs on key sectors staying in place, China may think:
“Why make deeper concessions when the U.S. won’t even roll back current tariffs?”
6.2. Unchanged Tariff?
I think the unchanged U.S. tariffs on automobiles, pharmaceuticals, and aluminum/steel very likely played a contributing role in China’s alleged last-minute withdrawal from the trade deal. This was based on 2019 history:
During the trade negotiations, China expected that any deal would include:
- Phased tariff rollbacks, not just a halt on new tariffs
- Removal or easing of existing tariffs, especially those imposed under:
- Section 301 (general goods from China)
- Section 232 (steel and aluminum, affecting many nations including China)
But Trump’s position at the time was:
- Keep key tariffs intact as leverage
- Use compliance enforcement over time to maybe reduce tariffs later
- Exclude items like automobiles, pharmaceuticals, and metals from immediate relief
This mismatch in expectations led to a breakdown.
The excluded tariffs were on strategically sensitive on China’s side

If these
tariffs remained, China may feel that the deal lacked good faith or
reciprocity.
While not the
only reason, the unchanged tariffs on autos, pharma, and metals were a
significant sticking point that contributed to the collapse of the draft deal.
China likely saw little benefit in making deeper concessions when key U.S.
tariffs remained untouched, especially on sectors core to its national
interests.
7.0 DID PRESIDENT
TRUMP REVISITED THE KEY ELEMENTS OF 2019 US-CHINA TRADE DEAL?
The answer is
almost a big “YES”. President Donald Trump is revisiting key elements of the
2019 U.S.- China trade deal especially the parts he considers strong
negotiating wins as a template or leverage point for his 2025 trade stance,
particularly as he prepares for a possible return to office. Here’s how :

Possible Risks in 2025 if President Trump Returns with 2019 Playbook
8.0 HOW
GLOBAL STOCK MARKET REACT 2025 (I
BELIEVE IT’S A MIRROR OF 2019)
General Market Reaction to the 2025 U.S. - China
Trade Deal (Based on What I Unqualifyingly Analyze)
a. Initial Optimism
Global indices did rally on news of a truce or deal -
markets often welcome de-escalation in trade tensions.
However, I’m unsure how positive did the investors
respond on the recent truce:
- Did it really ease tariff threats?
- Did it really restore global supply chains?
- Did it really renew business confidence?
Sectors That Benefit :
- Tech stocks (Apple, Nvidia, Samsung) -
less risk from tariffs or component supply disruptions
- Industrial/export-heavy firms (Caterpillar,
Boeing) - reliant on global trade
- Emerging markets - especially those linked to
supply chains or raw materials
b. Cautious Optimism or Flatlining After Details
Emerge
The deal might still lack clarity or enforceability, and
I see the markets started to show sign of cooling off.
Tariffs that remain (e.g., on automobiles,
pharmaceuticals, or metals) have somehow limit long-term investor
enthusiasm.
Personally, the investors and I feel that the deal
being more symbolic than structural.
c. Volatility Based on Political Rhetoric
Markets may react sharply to statements by US or
Chinese officials, especially if:
- Talks break down again
- There’s backlash from Congress, WTO, or domestic
industries
- Enforcement mechanisms are weak
Thus :
The 2025 deal mirrors earlier ones like in 2019, the market may be seeing:
- A short-term bounce
- Followed by sector-specific adjustments
- Then we’ll be seeing cautious trading until
implementation details are confirmed
WHAT I REALLY THINK
What I feel (don’t quote me), the deal did happened
but :
Temporary Stabilization, Not a Resolution
The agreement represents a short-term de-escalation rather than a long-term
solution. Structural issues in U.S.-China economic relations remain unresolved,
and both sides appear to be buying time rather than genuinely reconciling key
differences.
Strategic Motivations Behind the Truce
The U.S. agreed to postpone additional tariffs to
reduce pressure on domestic markets and consumers, especially ahead of
elections, while China aimed to ease the economic slowdown and regain investor
confidence.
Global Economic Reactions Are Cautiously
Optimistic
While markets initially reacted positively,
uncertainty lingers as no clear roadmap exists for addressing deep-rooted
issues such as intellectual property theft, state subsidies, and technology
transfer demands.
Underlying Rivalry Persists
The truce does not mark the end of U.S.-China
strategic competition. Rather, it shows a tactical pause amid broader
geopolitical rivalry spanning trade, technology, and global influence.
Long-Term Outlook Remains Volatile
Without meaningful and enforceable commitments, the
risk of trade tensions resurfacing remains high. Future negotiations will test
the political will and strategic priorities of both nations.