US-China tariff break is just the beginning of a trading marathon

Copyright © HT Digital Streams Limit all rights reserved. Reshma Kapadia, Barrons 4 min read May 18, 2025, 06:05 pm is a worker at a company that manufactures export curtains, in an industrial park in the eastern Zhejiang province in China. (AFP/Getty Images) Summary The decision to drop the air high rates has offered both countries for a short time-and left tremendous uncertainty about what is next. A worker at a business that produces export curtains, in an industrial park in the eastern Zhejiang province in China. The decision of Chinese and US officials to temporarily drop the air high rates has offered both countries for a short time-and left tremendous uncertainty about what the next is. Now, the initial relief of the agreement for a 90-day reduction of rates-washington lowers the rate on Chinese imports from 145% to 30% and Beijing reduces levies on US goods from 125% to 10%-making place to worry that a resolution is not fast or clean. Rates remain much higher than most expected. The 30% rates on Chinese goods are on top of an effective tariff rate of about 11% of levies imposed during Trump’s first term and other sector-oriented rates. If the extra rates of 30% on China are not reduced to 10% to 15%, the market will be disappointed, says Vivian Lin Thurston, a manager of William Blair’s upcoming markets growth strategy. The current rates, she says, will shave a 1% discount on the growth in China’s gross domestic product this year. But it may take time to see further relief. In a briefing on Thursday, China’s finance ministry had no updates on plans for talks between officials. The week came to an end without signs that President Donald Trump spoke to Chinese leader Xi Jinping, a possibility that he had driven earlier this week. A long list of posters continues, which complicates further discussions. Beijing has held several restrictions related to the export of critical minerals to the US, including magnets used by the military and for cars. The US shows a small sign of redemption of restrictions aimed at limiting China’s access to critical technology. The US Bureau of Industry and Safety has warned the technology industry over the past week against the use of certain Chinese chips, such as Huawei’s Ascend slides. Beijing said the US is abusing ‘export controls’. As a result, geopolitical strategists prepare clients for a messy few months. While they see steps that can take both sides to move forward negotiations, they warn against Spurts of unbundling and escalation. This, they say, would be a recipe for the kind of stock market volatility that abounded in the run-up to the Phase One trading transaction during the first Trump administration. Henrietta Treyz, Director of Economic Policy at the Veda Partners Policy, expects negotiations to continue much of the year. One concern is that new sector -specific rates, including one on pharmaceutical products, are likely to be rolled out in June, which is jeopardized the recently reached ceasefire. The administration will either have to adjust its plans or accept the risk, says Treyz. One route to switch the temperature further would be an agreement that lifted or reduced the 20% tariffs imposed by the US on China, with reference to the role in the flow of Fentanyl in the US analysts, the presence of Wang Xiaohong, China’s vice minister of public safety, noted, with last weekend’s discussions as a sign of Fentanyl Negotiates in the upcoming discussions. Even it’s not simple. According to the geopolitical analyzes, Chinese officials have been dealing with proposals on Fentanyl this year, but according to the geopolitical analysts. The US wants stronger measures to limit flow, with stricter enforcement and a more public approach that the Chinese government can involve in domestic pharmaceutical enterprises. Analysts believe China is likely to want to act quietly rather than splashing the kind of public splash the Trump administration, partly because Beijing has denied that it plays a role in the Fentanyl crisis in the US and blames it for a US failure to tackle addiction. A second vehicle to reduce tension can be a lighter version of the Phase 1 trade transaction that helped US trade representative Jamieson Greer to work. Beijing did not comply with the purchasing obligations or promises of structural changes in the agreement, but Treasury Secretary Scott Bestent noted that such promises to buy American goods could be a template for conversations. “The Chinese love the memo of understanding-a broad statement of what the intention is and where they want to go,” said Dennis Wilder, senior fellow at Georgetown University’s initiative for the US China dialog on global issues and formerly the director of China of National Security under President George W. Bush. ‘If Trump is eager for a quick win, the Chinese can give him a broad sleeve with some details about the creation of 500,000 jobs in the US or to buy more US goods, such as Boeing aircraft. “It may be the start for discussions on Thornier topics, including export restrictions and the opening of markets. But skepticism prevails over the chances of a greater agreement that can take years to have to have. Firms to accept. Officials, such as Bestent, said the US is not looking for a disconnect from China.