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U.S.-China Trade Truce Eases Tariffs but Leaves Core Issues Unresolved

The 90-day agreement reduces tariffs significantly, stabilizing markets and trade flows, but risks of re-escalation remain high without a comprehensive deal.

A drone image shows a farm worker operating a combine harvester during the soybean harvest season in Brazil's southernmost state, on a farm in Lagoa dos Tres Cantos, Rio Grande do Sul state, Brazil, April 1, 2025. REUTERS/Diego Vara./File Photo
U.S. dollar banknotes are displayed in this illustration taken, February 14, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
Trader Edward Curran works on the floor of the New York Stock Exchange, Wednesday, May 14, 2025. (AP Photo/Richard Drew)
Trader William Lawrence works on the floor of the New York Stock Exchange, Wednesday, May 14, 2025. (AP Photo/Richard Drew)

Overview

  • The U.S. and China have temporarily reduced tariffs to 30% and 10%, respectively, following record-high rates imposed in April 2025.
  • Global markets rallied, with the S&P 500 gaining 3% after the truce, though analysts caution the agreement is a tactical pause, not a resolution.
  • Container shipping bookings from China to the U.S. surged by 277%, reflecting immediate trade flow recovery but lingering supply chain uncertainties.
  • The Federal Reserve warns that sustained tariffs could disrupt disinflation progress, potentially leading to a temporary rise in consumer prices.
  • The agreement remains non-binding and fails to resolve key disputes over intellectual property and strategic technologies, leaving the risk of tariff reinstatement high.