Despite Tariff Cuts, US-China Trade Volumes Remain Stubbornly Low Weeks After Deal

On May 12, 2025, the United States and China inked a trade deal in Geneva, raising hopes for a revival of their strained economic relationship. The agreement cut U.S. tariffs on Chinese goods from 145% to 30% and reduced China’s counter-tariffs from 125% to 10% for a 90-day period. Yet, weeks later, trade volumes remain stubbornly low. Businesses, rattled by persistent uncertainty, are reluctant to recommit, casting a shadow over global markets.

Apollo’s chief economist, Torsten Slok, highlights a troubling sign in shipping data. Container traffic, a key indicator of trade health, shows no uptick. Slok’s recent analysis warns that the absence of a rebound signals deep caution among firms. Even with lower tariffs, companies are hesitant to lean back into Chinese supply chains, reflecting broader anxieties about the future of U.S.-China ties and the shifting global economic landscape.

The cautious approach to U.S.-China trade stems from a web of economic and geopolitical challenges. Tariffs and export controls, escalating since 2018, have forced companies to rethink global operations. The pandemic revealed supply chain fragilities, and disruptions from Russia’s 2022 invasion of Ukraine added further strain. With trade policy unpredictability at a peak, firms are focusing on stability over short-term savings.

Recent data reflects this tension. The Federal Reserve Bank of Richmond’s Q1 2025 CFO Survey revealed that 30% of financial leaders now view trade policy and tariffs as their primary worry, surpassing concerns about wages or costs. At the same time, Deloitte forecasts a 3.4% increase in U.S. business investment for 2025, with gains in equipment and intellectual property. This investment is flowing to politically aligned regions like Mexico and Southeast Asia, signaling a pivot away from China.

Globally, firms are reshaping supply chains at an unprecedented pace. Studies show 88% of companies plan significant changes in 2025, embracing strategies like multi-sourcing and near-shoring. For example, tech firms are expanding in Vietnam, while automakers turn to Mexico to bypass U.S. tariffs on Chinese components. These moves suggest a lasting shift, even if trade barriers temporarily ease.

The U.S.-China trade slowdown is part of a larger retreat from globalization. The Trade Openness Index has fallen to 56%, with projections of a further drop to 53% by mid-2026. U.S.-China bilateral trade has collapsed by nearly 90% amid soaring tariffs. Meanwhile, regional trade blocs are gaining ground, as nations like India and Japan bolster Asian ties and the U.S. strengthens North American partnerships.

Geopolitical divides are reshaping commerce across trade, technology, finance, and resources. The World Trade Organization projects a 0.2% to 2.0% decline in global merchandise trade for 2025, fueled by over 3,000 trade restrictions since 2019. Competition over critical minerals and tech export controls now doubles as national security strategy, complicating global flows.

China is adapting by targeting non-U.S. markets. Its exports grew 5.6% year-on-year in April 2025, driven by demand from Asia and Europe. This pivot softens the impact of U.S. tariffs but highlights a world fragmenting into economic camps. The era of tightly knit global supply chains, optimized for efficiency, feels increasingly out of reach.

In the U.S., views on China’s trade practices spark lively debate. Many Republicans, with 78% supporting higher tariffs, see duties as a shield for American industry and a response to China’s subsidies and intellectual property practices. The Trump administration’s tariff strategy, peaking at 145% on Chinese goods, embodies this stance, prioritizing domestic manufacturing and economic independence.

Conversely, many Democrats advocate for a balanced approach, emphasizing competition alongside cooperation. Polls indicate 49% of Democrats view U.S.-China trade as beneficial to national interests. They warn that prolonged decoupling could raise consumer prices and weaken U.S. global influence, urging targeted investments in key industries and stronger multilateral trade frameworks to maintain open markets.

The current U.S.-China trade agreement offers a brief reprieve, but its 90-day window is closing fast. Businesses must decide whether to boost imports or continue diversifying. Early signs show slight increases in electronics and tech components, yet the 25% U.S. tariff on Chinese auto parts limits broader gains. The clock is ticking, and clarity remains elusive.

Globally, the economy faces a pivotal moment. Regionalization and friend-shoring may enhance supply chain resilience but risk higher costs and slower growth. The World Trade Organization’s forecast of trade contraction looms, and firms are turning to analytics and blockchain to manage complexity. For consumers, this could mean pricier products and fewer options in the near term.

Despite the challenges, there’s potential for stability. Deloitte projects U.S. business investment to climb 6.3% by 2026, as trade policies stabilize. The U.S.-China trade story underscores a new reality: commerce is now deeply tied to geopolitics and security. As the world redraws its economic map, adaptability will define who thrives.