Trade Tensions Ease as US-China Pact Freezes New Tariffs for 90 Days

In Geneva last weekend, U.S. and Chinese negotiators forged an agreement that’s grabbed global attention. Announced on May 12, 2025, the deal pauses a recent spike in tariffs for 90 days, offering a breather in a trade relationship that’s been rocky for years. With tensions easing, businesses and consumers are eager to see how this plays out, though uncertainty remains about what lies beyond the truce.

The pact addresses a persistent issue: the U.S. trade deficit with China, which reached $295.4 billion in 2024. That gap has meant lost manufacturing jobs and pricier goods for Americans. By suspending new tariffs, both nations aim to stabilize trade flows and pave the way for deeper talks. The U.S. will lower additional duties by 115 percentage points to a 30 percent baseline, including a 20 percent fentanyl-related levy, while China drops its retaliatory tariffs to 10 percent.

This isn’t a cure-all, but it’s a pragmatic step. For factory workers in places like Pennsylvania, it could mean more orders and steadier paychecks. Yet some question whether the deal will deliver lasting change. Economists note that tariffs often drive up consumer costs, and scaling them back might ease those pressures, but only if negotiators can build on this moment. The agreement also scraps non-tariff barriers, like export bans, adding to its immediate impact.

Public reaction is mixed. A Michigan auto parts supplier told reporters he’s optimistic about export opportunities, but a retailer in Texas worries the temporary pause won’t lower prices fast enough. With so much riding on the next three months, the deal has sparked hope and skepticism in equal measure.

Trade deals often seem abstract, but their consequences hit close to home. For American workers, lower tariffs could revive industries like agriculture and electronics, where exports have slumped. The National Retail Federation projects that reduced trade barriers might save families $800 a year on everyday goods. That’s a tangible win for households feeling the pinch.

Still, the deal’s retained tariffs, including a 10 percent baseline, could keep some prices elevated. Small businesses importing from China face a tightrope: they’re hopeful for cost relief but braced for volatility if talks falter. A Minnesota store owner shared that she’s holding off on restocking until the 90-day period clarifies the outlook. The uncertainty underscores the deal’s high stakes.

The agreement also tackles the fentanyl crisis, which has devastated communities nationwide. Both countries pledged to curb precursor chemicals fueling illegal drug production. This builds on U.S. efforts, like ramped-up border seizures, and China’s 2024 decision to regulate three fentanyl-related substances. For families grappling with addiction, this cooperation signals a rare point of unity in a fraught relationship.

This deal fits into a larger global puzzle. Nations everywhere are balancing local priorities with international trade. Over 3,000 new trade restrictions have cropped up annually since 2022, from mineral export limits to agricultural duties. At the same time, bilateral pacts, like the U.S.-UK trade framework, show a hunger for tailored cooperation that sidesteps broader gridlock.

Supporters of robust trade policies argue they protect jobs and industries. They highlight investments like TSMC’s $40 billion Arizona plant, set to create 4,000 jobs, as evidence that tariffs draw investment. But critics, including some economists, warn that widespread tariffs raise costs and disrupt supply chains. They point to targeted investments, like the $52 billion CHIPS Act, as smarter ways to strengthen key sectors.

The U.S.-China dynamic adds complexity. While some see the truce as a diplomatic breakthrough, others caution it might ease pressure on issues like intellectual property or market access. Policymakers must juggle domestic gains with global stability, especially since two-thirds of world trade still flows tariff-free under international agreements.

The deal launches a working group, led by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, to hammer out details by mid-August. These talks will dive into market access, currency policies, and trade barriers. For businesses, clearer rules could mean smoother operations. For workers, it’s about securing a foothold in a fast-changing economy.

Past U.S.-China trade talks, stretching back to China’s 2001 WTO entry, show progress is tough. American concerns about reliance on Chinese semiconductors and pharmaceuticals have spurred moves to diversify supply chains. China’s share of U.S. imports dropped from 21.6 percent in 2017 to 16.3 percent in 2025, thanks to sourcing from Mexico and Vietnam. This deal could either cement that shift or foster closer ties.

Markets have cheered the truce, with stocks climbing as trade flows stabilize. But the 90-day clock is ticking. If no broader agreement emerges, tariffs could return, reigniting friction. As a trade expert noted, this pause buys time, but the real test is whether both sides can turn a ceasefire into a foundation for progress.