Cover: U.S.-China Call a Truce, But Global Trade Has Changed Forever (AI Translation)

【周刊提前读】关税休战 全球贸易开启链路重塑

The recent and turbulent U.S.-China tariff war, initiated by President Donald Trump, has been temporarily paused following high-level negotiations in Geneva. On May 12, both countries agreed to cancel 91% of their respective additional tariffs, while suspending a portion of remaining tariffs for 90 days. This détente includes establishing a bilateral consultation mechanism for ongoing economic and trade negotiations, marking a significant, though possibly temporary, de-escalation in one of the world’s most consequential trade confrontations [para. 1][para. 2][para. 3].

The agreement emerged after months of rapidly escalating tariffs, with the U.S. initially announcing a 34% “reciprocal tariff” on Chinese goods, partially suspended after adverse reactions in global markets. China mirrored each American tariff measure with retaliatory tariffs of equal magnitude, resulting in a standoff that paralyzed much of bilateral trade and sent shockwaves through international markets. Major U.S. indices and global stocks dropped steeply, and growth forecasts were repeatedly downgraded—Goldman Sachs, for instance, reduced its U.S. year-end GDP projection from 2.5% to 0.5% in the wake of the tariff hikes; the IMF also cut 2025 U.S. growth forecasts by nearly a percentage point [para. 4][para. 5][para. 8][para. 9].

The trade war had broader implications: the U.S. effective tariff rate on Chinese goods spiked to record levels—analysts estimated these rates ranged from 31% to over 44%—before dropping to 13–18% after the truce, still markedly above pre-Trump levels (about 2.4%). This sudden and dramatic policy inconsistency destabilized global value chains and prompted major nations to reconsider supply chain dependencies on the U.S. [para. 6][para. 8][para. 14].

Negotiations beyond China, with traditional U.S. allies like Japan, South Korea, and the European Union, have stagnated or become increasingly combative, with countries either considering or threatening their own retaliatory measures. The only substantial agreement aside from China was a partial, still-vague framework deal with the UK. Domestically, Trump’s “reciprocal tariffs” faced intense criticism from across the American sociopolitical spectrum, contributing to record-low presidential approval ratings [para. 7][para. 10][para. 17][para. 19].

Trump’s reliance on tariffs is rooted in a reversal of 80 years of U.S. trade policy, which previously sought to dismantle global trade barriers. The recent U.S. approach, intensifying after Trump’s January 2025 inauguration, aimed to use tariffs to generate fiscal revenue, protect domestic industries, and force trading partners into negotiation. However, this strategy led to economic contraction in the U.S.—GDP shrank in Q1 2025 for the first time in years, and the trade deficit soared despite promises to reduce it. The government’s debt and deficit problems worsened, while plans for sweeping tax cuts became harder to fund [para. 14][para. 16][para. 20].

The consequences of these policies are far-reaching. Even with the Geneva truce and market rebounds, the global trading system remains damaged, and supply chains have already adapted, with more trade routed through third countries in Asia. There is skepticism, even among Trump allies, about the long-term sustainability or efficacy of high tariff policies, especially as the November 2026 U.S. midterm elections approach. Analysts expect the administration will have to balance political, economic, and strategic pressures, likely resulting in further negotiations and modest tariff reductions rather than a return to aggressive escalation [para. 24][para. 26][para. 28][para. 30][para. 33].

Looking ahead, most experts agree the truce provides crucial but fragile relief. While markets welcomed the deal and China’s economic outlook improved, the U.S. faces higher debt costs, political uncertainty, and a slowing economy. With global supply chains already reorienting and rival blocs (such as the EU) preparing their own countermeasures, the world trading order has been fundamentally altered, making any return to pre-war norms unlikely in the near future [para. 38][para. 42][para. 46].