If not for the trade war between the world’s two largest economies, Easy Signs would now be hiring dozens of workers at its factory in Allentown, Pa. It would be readying plans to build a second plant somewhere out West — Salt Lake City was a contender — generating another 100 jobs. Based in Australia, Easy Signs manufactures banners and marketing installations for corporate events, using huge printers to press logos and slogans onto rolls of cloth. Its American business has been growing 70 percent a year. Still, the company is putting off an expansion. Its cloth signs are displayed on aluminum stands made in China. Those products are now subject to a series of tariffs reaching as high as 365 percent under a [policy](https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/june/ustr-issues-tariffs-chinese-products) set in motion by former President Donald J. Trump and continued by the Biden administration in the name of protecting American industry from Chinese government subsidies. The costs of imported components could increase further should Mr. Trump win November’s presidential election and follow through on his threat to add a tariff of [60 percent](https://www.nytimes.com/2024/06/27/us/politics/trump-trade-tariffs-imports.html) or more on all Chinese goods, and 10 percent to all imports. “That’s definitely a scary concept,” said Andy Fryer, co-founder of Easy Signs. “The whole feasibility goes out the window.” The Allentown, Pa., factory of Easy Signs. Credit...Aaron Richter for The New York Times Thank you for your patience while we verify access. If you are in Reader mode please exit and [log into](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2024%2F08%2F19%2Fbusiness%2Fchina-us-trade-war.html&asset=opttrunc) your Times account, or [subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2024%2F08%2F19%2Fbusiness%2Fchina-us-trade-war.html) for all of The Times. Thank you for your patience while we verify access. Already a subscriber? [Log in](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2024%2F08%2F19%2Fbusiness%2Fchina-us-trade-war.html&asset=opttrunc). Want all of The Times? [Subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2024%2F08%2F19%2Fbusiness%2Fchina-us-trade-war.html).

Eight years ago, when a newly elected Donald J. Trump promised to apply the powers of the Oval Office to start a trade war with China, the target of his ire was widely viewed as a juggernaut. China was the indispensable factory floor to the world and a swiftly developing market for goods and services. As Mr. Trump now prepares for his second stint in the White House, he is vowing to intensify trade hostilities with China by imposing additional [tariffs of 60 percent](https://www.nytimes.com/2024/11/07/business/economy/trump-tariffs-trade-what-to-know.html) or more on all Chinese imports. He is pressuring a country that has been chastened by a powerful combination of overlapping forces: the calamitous end of a [real estate](https://www.nytimes.com/2024/11/04/business/china-foreclosures-mortgages.html) investment binge, incalculable losses in the [banking system](https://www.nytimes.com/2023/09/30/business/china-evergrande-banks-property.html), a local government [debt crisis](https://www.nytimes.com/2023/12/05/business/china-debt-moodys-outlook.html), flagging [economic growth](https://www.nytimes.com/2024/10/17/business/china-gdp-third-quarter.html) and chronically [low prices](https://www.nytimes.com/2024/10/07/business/china-pinduoduo-ecommerce.html) — a potential harbinger of long-term stagnation. The decline of fortunes at home has made Chinese companies especially focused on sales abroad. And that makes the country vulnerable to any threat to its export growth, a weakness that would enhance the expected pressure from the Trump administration as it plans to seek a deal that would increase Chinese purchases of American goods. “The balance of power has certainly shifted in favor of the United States,” said Eswar Prasad, a professor of trade policy at Cornell University who was previously the head of the China division at the International Monetary Fund. “The Chinese economy is not quite on the ropes, but it has been struggling for a while.” Yet complicating factors beneath that widely shared assessment may strengthen China’s ability to endure whatever measures the incoming Trump administration may have in store. Consumer spending in China has slumped, but the government has significant resources to stoke the domestic economy.Credit...Qilai Shen for The New York Times Thank you for your patience while we verify access. If you are in Reader mode please exit and [log into](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2024%2F11%2F11%2Fbusiness%2Ftrump-china-trade-war.html&asset=opttrunc) your Times account, or [subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2024%2F11%2F11%2Fbusiness%2Ftrump-china-trade-war.html) for all of The Times. Thank you for your patience while we verify access. Already a subscriber? [Log in](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2024%2F11%2F11%2Fbusiness%2Ftrump-china-trade-war.html&asset=opttrunc). Want all of The Times? [Subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2024%2F11%2F11%2Fbusiness%2Ftrump-china-trade-war.html).

 Much of the discussion around [tariffs](https://qz.com/donald-trump-tariffs-tax-mexico-canada-china-1851767432) has been about the negative impact they’re likely to have on consumers and their purchasing power. But some companies, if not consumers, could see an upswing in business due to a trade war. A lot of that depends on whether these tariffs are a short-term tool or a long-haul policy shift. “I don’t think it would be wise for companies short-term, especially related to Mexico-Canada, to make any changes unless there is a fluid transition industry where it’s possible,” says Jack Buffington, an associate professor of practice and expert in supply chain management at the University of Denver. “Longer-term, there are definite winners in the U.S. economy: lumber, energy, automotive, perhaps high-end electronics,” says Buffington. “The expectation is that this will lead to investment into the U.S. and if this happens, then it will be a boom for manufacturing.” Here are some businesses that could benefit from a protracted trade war.

China keeps its economic growth target at 'around 5%' for 2025 despite looming trade war and other headwinds BEIJING -- China keeps its economic growth target at 'around 5%' for 2025 despite looming trade war and other headwinds. 

European Central Bank cuts rates by a quarter point to support growth as possible trade war looms FRANKFURT, Germany -- European Central Bank cuts rates by a quarter point to support growth as possible trade war looms. 

Bridgewater Associates founder Ray Dalio isn’t thrilled about President Donald Trump’s escalating trade war. Looking at historical patterns, the billionaire investor has made a chilling parallel. Speaking at a CNBC ([CMCSA\-2.35%](https://qz.com/quote/CMCSA)) conference in Singapore on Wednesday, Dalio invoked 1930s Germany to highlight his concerns with the current trade war, including growing conflicts among nations. He compared the trade war to Germany’s situation in the 1930s, citing debt write-downs, tariff hikes to drive revenue, and efforts to strengthen domestic industry, [Bloomberg reported](https://www.bloomberg.com/news/articles/2025-03-12/ray-dalio-cites-1930s-germany-to-assess-unfolding-trade-war?sref=P6Q0mxvj). “Be nationalistic, be protectionist, be militaristic. That’s the way these things operate,” he said. Dalio warned that these tensions could escalate into conflicts between countries, though he clarified that he wasn’t necessarily referring to military confrontation. He also noted that there could be significant opportunities for nations that remain neutral. “Think about the US, Canada, Mexico, China,” Dalio said. “There will be fighting and that will have consequences, and I think that’s the main thing to pay attention to.” He emphasized that he is remaining politically neutral and is just making an observation like a mechanic or doctor would. In contrast, Trump has defended tariffs as a key driver of [U.S. economic dominance](https://qz.com/donald-trump-recession-us-markets-tariffs-china-mexico-1851769203). “Tariffs are having a tremendously positive impact,” Trump said at a business roundtable on Tuesday, March 11, adding that they could go even “higher.” Trump pointed to companies building plants in states like Michigan, Indiana, and South Carolina instead of Mexico. He stressed that the ultimate goal isn’t just generating revenue but also creating U.S. jobs, arguing that tariffs help prevent job losses. Still, uncertainty surrounding Trump’s shifting trade policies has [rattled markets](https://qz.com/donald-trump-tariffs-stock-market-djia-sp500-nasdaq-1851768866), contributing to an extended sell-off and [fueling fears of a recession](https://qz.com/recession-risk-predict-trump-tariffs-inflation-economy-1851769081). Since taking office in January, Trump has imposed — and at times delayed —tariffs on Canada, China, and Mexico. Most recently, he announced a 25% tariff on global steel and aluminum imports. In response, Canada, China, and the European Union have retaliated with their own tariffs on select U.S. goods.

For the second time this week, President Trump has threatened to disrupt trade with a close ally for retaliating in a trade war that he started — a tactic that could lead to compromise, or to economic spats that spiral further out of control. On Thursday morning, Mr. Trump tried to cow the European Union into submission, threatening [in a social media post](https://truthsocial.com/@realDonaldTrump/posts/114155003492555395) to put a 200 percent tariff on European wine and Champagne unless the bloc dropped a 50 percent tariff on U.S. whiskey. The European Union had imposed that tariff in response to levies that Mr. Trump put on global steel and aluminum on Wednesday. Mr. Trump deployed a similar tactic against Canada on Tuesday, threatening to double 25 percent tariffs on Canadian steel and aluminum to try to get Ontario to lift a surcharge on electricity sold to the United States. The province had imposed the charge after Mr. Trump put other tariffs on Canada this month. After Ontario suspended its surcharge, Mr. Trump walked back his threats. Over the last several weeks, Mr. Trump has presided over a confusing and potentially economically devastating back and forth of tariffs and tariff threats, playing a global game of chicken as he tries to get some of the United States’ closest allies and trading partners to back down. Mr. Trump has wielded the tariff threats without regard for their economic consequences and, increasingly, seemingly without regard for the impact on stock markets. The S&P 500 slumped again on Thursday after Mr. Trump threatened Europe and reiterated at the White House that he would impose big tariffs. When asked whether he might relent on Canada, which sent a delegation to the United States on Thursday to try to calm trade tensions, Mr. Trump said: “I’m not going to bend at all.” Thank you for your patience while we verify access. If you are in Reader mode please exit and [log into](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F03%2F13%2Fus%2Fpolitics%2Ftrump-trade-war-europe-canada.html&asset=opttrunc) your Times account, or [subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F03%2F13%2Fus%2Fpolitics%2Ftrump-trade-war-europe-canada.html) for all of The Times. Thank you for your patience while we verify access. Already a subscriber? [Log in](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F03%2F13%2Fus%2Fpolitics%2Ftrump-trade-war-europe-canada.html&asset=opttrunc). Want all of The Times? [Subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F03%2F13%2Fus%2Fpolitics%2Ftrump-trade-war-europe-canada.html).

The world’s biggest powers were deep in a trade war. Economic losses from the tariffs that President Trump had imposed on most of the world, along with global retaliation, were accumulating. Jobs were being lost, inflation was ticking up and the world was both frustrated with and anxious about the United States. While the stakes were real, the trade war was not. Instead, it was a simulation to better understand how a global trade fight might unfold. Last month, two dozen trade experts from the United States and other countries gathered at a Washington think tank to try to simulate what could happen if Mr. Trump moves ahead with his plan to impose punishing tariffs on America’s biggest trading partners. Teams representing China, Europe, the United States and other governments spent a day running between conference rooms, offering proposals to remove the tariffs and make trade deals to forestall economic collapse. The game, which took place at the Center for a New American Security, a bipartisan think tank focused on security issues, included think tank experts and former officials in the Trump and Biden administrations. The exercise was not aimed at predicting the future. Instead, by acting out what might happen, the participants were trying to reveal some of the dynamics that might be at play as Mr. Trump pursues an aggressive trade approach against allies and adversaries alike. In the last two months, Mr. Trump imposed tariffs on China, Canada and Mexico, as well as levies on global steel and aluminum imports. On Wednesday, Mr. Trump is expected to announce a plan to raise tariff rates on other countries, and his 25 percent tariffs on cars and auto parts will go into effect on Thursday. Thank you for your patience while we verify access. If you are in Reader mode please exit and [log into](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F01%2Fbusiness%2Feconomy%2Ftrump-trade-war-game.html&asset=opttrunc) your Times account, or [subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F01%2Fbusiness%2Feconomy%2Ftrump-trade-war-game.html) for all of The Times. Thank you for your patience while we verify access. Already a subscriber? [Log in](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F01%2Fbusiness%2Feconomy%2Ftrump-trade-war-game.html&asset=opttrunc). Want all of The Times? [Subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F01%2Fbusiness%2Feconomy%2Ftrump-trade-war-game.html).

Yesterday, President Trump held up a chart at the White House Rose Garden. He laughed that not everyone in the audience could read it because the font was so small. But the content was anything but small. It detailed the tariffs he will impose on China, the European Union, Japan, India and dozens of others. That chart started a trade war against the rest of the world. The levies will total 10, 20 and even 50 percent, depending on the country. “Many people had been expecting the president to announce high tariffs today, but the numbers that he just revealed are stunning,” my colleague Ana Swanson said. In Trump’s telling, the tariffs are necessary to counter trade barriers that other countries have placed on America. To some extent, he has a point: Other nations do have higher tariffs than the United States does. But Trump exaggerates how big the gap is, [as Ana explained](https://www.nytimes.com/2025/04/02/us/politics/trump-tariffs-global-trade.html). And these tariffs will not simply hurt other countries; they will also hurt the U.S. economy. Experts say the levies will result in higher prices and lower economic growth — and potentially even a recession. Today’s newsletter looks at Trump’s new tariffs and what may come next, with help from reporting by my colleagues. The tariffs make little distinction between allies and adversaries. The administration claims they are based on other countries’ trade barriers against the United States. In reality, the levies are based on how much more another country exports to America than imports from it, [Tony Romm, Ana and Lazaro Gamio wrote](https://www.nytimes.com/2025/04/02/business/economy/trump-tariff-rates-calculation.html). The difference between exports and imports doesn’t necessarily reflect trade barriers; Americans may simply want to buy more stuff from, say, Japan than the Japanese want to buy from the United States. This chart shows the levies on some of America’s biggest trading partners. (The new fees exclude Canada and Mexico, which already face separate tariffs.) A table shows new tariffs for ten select countries that make up the largest shares of U.S. imports. The European Union will see its tariff rate rise to 20 percent, China to 34 percent, Japan to 24 percent, Vietnam to 46 percent and South Korea to 26 percent.   Sources: White House; Observatory of Economic Complexity By The New York Times Thank you for your patience while we verify access. If you are in Reader mode please exit and [log into](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F03%2Fbriefing%2Fthe-trade-war-begins.html&asset=opttrunc) your Times account, or [subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F03%2Fbriefing%2Fthe-trade-war-begins.html) for all of The Times. Thank you for your patience while we verify access. Already a subscriber? [Log in](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F03%2Fbriefing%2Fthe-trade-war-begins.html&asset=opttrunc). Want all of The Times? [Subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F03%2Fbriefing%2Fthe-trade-war-begins.html).

 Tariffs are the talk around many water coolers across the United States, a day after President Trump launched his historic trade war. But around some water coolers the talk isn’t as pervasive because the jobs aren’t impacted much. “Part of the argument for tariffs is that they are good for U.S. jobs, with the employment effect being worth the higher prices and harm to consumers. But that’s not really how they work. In fact, tariffs are likely to cause negative employment effects because of the way that they ripple through the economy,” says Steven Durlauf, the Frank P. Hixon Distinguished Service Professor at the Harris School of Public Policy; at the University of Chicago. Here are some professions that will likely feel less impact.

On Thursday morning in Shanghai, as shoppers filled the luxury malls and delivery drivers whizzed around the winding streets at breakneck speed, financiers breathed a cautious sigh of relief. Overnight, US President Donald Trump had [reversed course](https://www.theguardian.com/world/2025/apr/10/us-china-trade-war-intensifies-as-beijings-tariffs-come-into-effect-after-trump-pause), announcing a 90-day pause on his so-called “reciprocal tariffs” of up to 50% for dozens of countries. Although China got no such reprieve – instead, the levy on Chinese goods was increased to 145% – the temporary return of normal trade channels showed Chinese businesspeople that all was not lost. Trump’s announcement of punitive tariffs on countries across south-east Asia had risked closing off the routes that Chinese companies have been using since his first term in office to circumvent his levies. [ Will Trump’s tariff chaos be China’s gain in global trade wars? ](https://www.theguardian.com/us-news/2025/apr/10/will-trump-tariff-chaos-be-china-gain-global-trade-wars) Since 2017, thanks to tariffs on Chinese goods, the share of China’s exports bound for the US has dropped from about 20% to less than 15%. But much of that trade has simply been re-routed through third countries, as Chinese firms set up shop in places with cheaper labour costs and easier access to the US market. Chinese foreign direct investment in Asean countries reached $24bn in 2023, up from less than $10bn in 2017. Several of China’s major solar companies have shifted manufacturing to south-east Asia. So despite the fact that “made in China” solar panels are virtually nonexistent in the US market, [80% of the US’s solar panels](https://www.reuters.com/business/energy/us-decide-another-round-solar-panel-tariffs-2024-11-29/) come from Malaysia, Cambodia, Vietnam and Thailand. Next week, President Xi Jinping will visit Vietnam, Malaysia and Cambodia, on his first official foreign trip this year. Hobbling those countries’ ability to export to the US would inflict more true economic pain on Chinese companies than bilateral tariffs ever could. So in Shanghai, China’s commercial capital, a return to a [narrowly US-China trade war](https://www.theguardian.com/world/2025/apr/10/us-china-trade-war-intensifies-as-beijings-tariffs-come-into-effect-after-trump-pause), while still unwelcome, is some comfort. But on the ideological front, the mood in China is hardening over Trump’s imposition of 145% tariffs. State media and the foreign ministry have been sharing a clip of the former US president Ronald Reagan decrying tariffs in 1987. On X, foreign ministry spokesperson Mao Ning has been trolling the US, posting a meme of a Make America Great Again baseball cap increasing in price from $50 to $77. The most telling propaganda has been the resurfacing of a video clip of former Chinese leader Mao Zedong from 1953. “As to how long this war will last, we are not the ones who can decide,” Mao says. “No matter how long this war is going to last, we will never yield,” he says to applause. Mao was referring to the Korean war, a conflict which is remembered in China as a time when China successfully stood up to the US through China’s support of North Korea. But in 2025, the combative rhetoric is being applied to the trade war, in which China has vowed to “[fight to the end](https://www.theguardian.com/world/2025/apr/08/china-vows-to-fight-to-the-end-against-latest-trump-tariff-threat)”. With suggestions from influential commentators that China might [suspend cooperation with the US on fentanyl control](https://www.theguardian.com/world/2025/apr/09/china-unlikely-to-blink-first-as-trumps-trade-war-enters-uncharted-new-territory) as a retaliation for the tariffs, some are comparing the present moment to the Opium Wars, which were fought over an unsavoury mix of addictive opiates and anger about trade imbalances – just like in 2025. Ren Yi, an influential commentator who writes under the name Chairman Rabbit, wrote on Thursday: “The trade war is a war of public opinion, public sentiment, and information … China should adopt a ‘wartime’ state of tension in terms of public opinion, and all sectors should move in one direction and one goal. This issue is by no means a joke.” There is an ominous sense that the US-China relationship could still get worse. On Thursday, in a largely symbolic move, China said it would [restrict the import](https://www.reuters.com/business/media-telecom/beijing-bites-back-us-tariffs-by-curbing-hollywood-imports-2025-04-10/) of Hollywood movies. China’s tariffs on US goods were increased on Friday [to 125%](https://www.theguardian.com/us-news/2025/apr/11/macron-speaks-of-90-days-of-uncertainty-as-trump-tariffs-spark-further-losses). Six US companies have been added to Beijing’s list of “unreliable entities”, restricting their ability to do business in China. Discussion on Chinese social media, massaged by censors to ensure only the most nationalist comments are prominent, are full of defiance and bombast. One meme joked that Trump’s new slogan should be “MCGA” – Making China Great Again. But some commentators have warned against rampant nationalism on the Chinese side. In a recent essay published in Chinese media, Zheng Yongnian, a professor at the Chinese University of Hong Kong in Shenzhen, wrote: “We must not underestimate the vitality of American society. The vitality of the United States has never been in the government, but in society and capital. “There are still a large number of people in domestic media, especially social media, who feel that they have ‘won’,” Zheng wrote. “This is very dangerous. If this happens, we will be confused by the west … and in the end will make strategic mistakes.” Offline, some fear, that without the linchpin of trade keeping the US and China on co-operative terms, the reasons for avoiding more dangerous conflicts, such as war in the Taiwan Strait or the South China Sea, are becoming less compelling.

The United States and China are waging a trade war. Relative to the indiscriminate trade battles President Trump has pitched against the rest of the world, a conflict with China might seem small or even justified. China, after all, is an adversary. It has taken American jobs and threatened to topple democracy in Taiwan. But open conflict with one of America’s three largest trade partners is still a big departure from decades of U.S. policy. It will bring higher prices and lower economic growth, experts say. Is it worth it? Today’s newsletter will look at the arguments on both sides. There are two main arguments for Trump’s 145 percent tariffs on China. The first is about the trade imbalance. America has bought a lot from China over the years, and China has not returned the favor. To sell stuff there, American companies bend over backward to comply with Communist Party rules. Chinese companies don’t face the same barriers. Consider video games: U.S. companies have to censor their games to get into Chinese markets, if they can get in at all. Chinese developers ship their games to the United States replete with [pro-China censorship](https://www.nytimes.com/2025/02/23/briefing/censoring-games.html). Trump and his allies say tariffs will force China to negotiate friendlier trade rules with the United States. China can’t afford to lose America, its biggest customer, if it wants to keep its economy growing quickly. It will have to capitulate and allow more U.S. products into its markets. The second argument is about national security. America relies on China for electronic chips, pharmaceutical ingredients and rare earth metals. (Beijing [has suspended critical rare earth exports](https://www.nytimes.com/2025/04/13/business/china-rare-earths-exports.html), and U.S. companies don’t have an alternative supplier.) At the same time, China is working to weaken the United States on the global stage, and America could go to war with China if Beijing invades Taiwan. The tariffs on China force the countries to decouple; companies will have to find other places, including within the United States, to source and make their products. A rare earth magnets factory in Ganzhou, China.Credit...Keith Bradsher/The New York Times Thank you for your patience while we verify access. If you are in Reader mode please exit and [log into](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F14%2Fbriefing%2Fthe-us-china-trade-war-donald-trump.html&asset=opttrunc) your Times account, or [subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F14%2Fbriefing%2Fthe-us-china-trade-war-donald-trump.html) for all of The Times. Thank you for your patience while we verify access. Already a subscriber? [Log in](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F14%2Fbriefing%2Fthe-us-china-trade-war-donald-trump.html&asset=opttrunc). Want all of The Times? [Subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F14%2Fbriefing%2Fthe-us-china-trade-war-donald-trump.html).

President Trump came into office sounding as if he were eager to deal with President Xi Jinping of China on the range of issues dividing the world’s two biggest superpowers. He and his aides signaled that they wanted to resolve trade disputes and lower the temperature on Taiwan, curb fentanyl production and get to a deal on TikTok. Perhaps, over time, they could manage a revived nuclear arms race and competition over artificial intelligence. Today it is hard to imagine any of that happening, at least for a year. Mr. Trump’s decision to stake everything on winning a trade war with China threatens to choke off those negotiations before they even begin. And if they do start up, Mr. Trump may be entering them alone, because he has alienated the allies who in recent years had come to a common approach to countering Chinese power. In conversations over the past 10 days, several administration officials, insisting that they could not speak on the record, described a White House deeply divided on how to handle Beijing. The trade war erupted before the many factions inside the administration even had time to stake out their positions, much less decide which issues mattered most. The result was strategic incoherence. Some officials have gone on television to declare that Mr. Trump’s tariffs on Beijing were intended to coerce the world’s second-largest economy into a deal. Others insisted that Mr. Trump was trying to create a self-sufficient American economy, no longer dependent on its chief geopolitical competitor, even if that meant decoupling from the $640 billion in two-way trade in goods and services. Shipping containers in the port of Tianjin, China, last month. Beijing has matched every one of Mr. Trump’s tariff hikes, trying to send the message that it can endure the pain longer than the United States can. Credit...The New York Times Thank you for your patience while we verify access. If you are in Reader mode please exit and [log into](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F14%2Fus%2Fpolitics%2Ftrump-trade-war-china-dilemma.html&asset=opttrunc) your Times account, or [subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F14%2Fus%2Fpolitics%2Ftrump-trade-war-china-dilemma.html) for all of The Times. Thank you for your patience while we verify access. Already a subscriber? [Log in](https://myaccount.nytimes.com/auth/login?response_type=cookie&client_id=vi&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F14%2Fus%2Fpolitics%2Ftrump-trade-war-china-dilemma.html&asset=opttrunc). Want all of The Times? [Subscribe](https://www.nytimes.com/subscription?campaignId=89WYR&redirect_uri=https%3A%2F%2Fwww.nytimes.com%2F2025%2F04%2F14%2Fus%2Fpolitics%2Ftrump-trade-war-china-dilemma.html).

After a fortnight in which Donald Trump’s “liberation day” tariffs evolved into an escalating trade war with [China](https://www.theguardian.com/world/china), a sense of defiant nationalism has been building in the east Asian country. The Chinese foreign ministry has even been sharing historic video clips from the former leader Mao Zedong: _“As to how long this war will last, we are not the ones to decide … We’ll fight until we completely triumph!”_ Speaking from Beijing, the Guardian’s China correspondent, **Amy Hawkins**, tells **Helen** **Pidd** that while politically there is little appetite for backing down, the Chinese economy is not as strong as it once was, with caution that set in during the pandemic holding back its previous dynamism. Hawkins explains that though the Chinese government has been diversifying its trade partners since the US president’s first term and is increasingly seeking to boost domestic consumption of the goods it manufactures, a global recession – which may emerge from a trade war – is something that many in China are worried about, including traders at Yiwu, the world’s largest wholesale market. The pair also discuss how trade has been the linchpin of US-China relations for decades, and that without it, the risk of wider conflict is much greater. **_Support the Guardian today:_ [_theguardian.com/todayinfocuspod_](http://theguardian.com/todayinfocuspod)**  Photograph: Alex Plavevski/EPA

The trade war the U.S. is waging with countries around the world could reshape the global economy. NPR's Planet Money brings a dispatch from Canada.

China has warned it will take “resolute and reciprocal” countermeasures against other countries negotiating with the US if they make a deal at China’s expense during the trade war. China’s commerce ministry was responding to recent news reports that Donald Trump planned to pressure other countries to limit their trade with China in return for tariff exemptions. Beijing and the US are locked in an escalating trade war, running separately to the US’s efforts to rewrite trade deals with the rest of the world. “China firmly opposes any party reaching a deal at the expense of China’s interests,” the ministry said on Monday. “Appeasement will not bring peace, and compromise will not be respected … To seek one’s own temporary selfish interests at the expense of others’ interests is to seek the skin of a tiger.” That approach, it warned, “will ultimately fail on both ends and harm others”. Tit-for-tat tariffs between the US and China have reached 145% on Chinese exports to the US and [125% on US exports to China](https://www.theguardian.com/us-news/2025/apr/11/macron-speaks-of-90-days-of-uncertainty-as-trump-tariffs-spark-further-losses). Trump’s tariffs on China are the highest of the global tariffs he announced for all US trading partners as part of his so-called “liberation day” campaign to make trading relationships more favourable to the US and bring more manufacturing on to US soil. This month, as the US appeared destined for a recession, Trump announced a 90-day pause of the higher tariffs, reducing all countries to [a blanket 10%](https://www.theguardian.com/us-news/2025/apr/16/trump-tariffs-will-send-global-trade-into-reverse-this-year-warns-wto) – except China. Some countries are engaged in negotiations with the US to lower or remove tariffs before the 90-day deadline. Reporting in the last week has suggested that Trump’s team intends to use those negotiations for its trade war with China. The [Wall Street Journal](https://www.wsj.com/politics/policy/u-s-plans-to-use-tariff-negotiations-to-isolate-china-177d1528) and Bloomberg have both cited US official saying the US was preparing to pressure those nations to curb their own trade with China or impose monetary sanctions. “If such a situation occurs, China will never accept it and will resolutely take reciprocal countermeasures,” China’s commerce ministry said. Responding to the reports on Saturday, Rachel Reeves, the UK chancellor, [dismissed the idea](https://www.theguardian.com/politics/2025/apr/19/rachel-reeves-trade-policy-uk-china-business) that the UK would economically disengage from China. “Well, China is the second biggest economy in the world, and it would be, I think, very foolish to not engage,” Reeves told the Telegraph. “That’s the approach of this government.” Trump said on Thursday that the US was in talks with China on tariffs, adding that he was confident the world’s largest economies could make a deal to end the bitter trade war. “Yeah, we’re talking to China,” Trump told reporters in the Oval Office. “I would say they have reached out a number of times. “I think we’re going to make a very good deal with China.” China has vowed to fight a trade war “to the end” and has not confirmed that it is in talks with Washington, though it has called for dialogue. Chinese officials have said the US need to show greater respect, It has strongly criticised what it calls “unilateralism and protectionism” by the US – and warned about an international order reverting to the “law of the jungle”. “Where the strong prey on the weak, all countries will become victims,” Beijing said on Monday.

In recent days, Donald Trump has signaled eagerness to reach a trade agreement with China. The president said Tuesday that [his 145 percent tariffs](https://www.foxbusiness.com/politics/trump-hints-cutting-china-tariffs-substantially-from-145) on Chinese imports will “come down substantially” in the near future. On Thursday, Trump said that his administration is [already negotiating](https://www.bloomberg.com/news/articles/2025-04-24/pboc-s-pan-warns-trade-frictions-threaten-trust-in-world-economy) with China over trade, saying, “They had a meeting this morning.” Asked who precisely had a meeting, Trump told reporters, “it doesn’t matter who ‘they’ is.” Yet that same day, China [denied the existence](https://www.bloomberg.com/news/articles/2025-04-24/pboc-s-pan-warns-trade-frictions-threaten-trust-in-world-economy) of such negotiations, saying that “any reports on development in talks are groundless.” By most accounts, China feels little need to come to the table. Chinese leaders [reportedly believe](https://www.wsj.com/world/china/china-bets-trump-will-back-down-on-tariffs-04097ec3) that they can wait Trump out. They’re not enticed by his floated offers of partial tariff relief, but instead favor a total pause on the tariffs, as a condition for commencing negotiations over the two nations’ trade disputes. China’s intransigence may take some US observers (particularly those in the White House) by surprise. The Chinese economy has been [suffering from deflation](https://www.nytimes.com/2025/04/17/business/china-deflation-trump-tariffs.html), due to a collapse in its property sector. Manufacturing has been one of the nation’s few economic bright spots. Now, as many as 20 million Chinese workers are at risk of losing their jobs because of a collapse in exports to the US, according to an estimate from [Goldman Sachs](https://www.nytimes.com/2025/04/17/business/china-deflation-trump-tariffs.html). Nevertheless, the Chinese government believes that it has the upper hand in this trade fight. And they’re probably right. That could have dire implications for America’s economy, if Trump cannot reconcile himself to a near total capitulation. China has the advantage in its trade war with the US for at least three reasons: Donald Trump’s trade policies are all rooted in one fundamental — and fundamentally wrong — [premise](https://www.vox.com/politics/407662/trump-trade-deficits-bilateral-tariffs): If America runs a trade deficit with another country, then we are effectively “[subsidizing](https://www.vox.com/politics/402530/trump-tariffs-canada-mexico-explanation)” that nation. After all, in that scenario, our trade partner is receiving more money from us than we are collecting from it. Given this reality, the president long assumed that America could easily win a trade war with China, which runs a large trade surplus with the US. Trump spelled out the logic of his [position in 2018](https://x.com/realDonaldTrump/status/969525362580484098), tweeting, “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.” But this is poor reasoning. Trade is not a zero-sum game in which sellers “win” and buyers “lose.” This is easy to see at the individual level. Unless you own a farm or snack-food company, you probably run a trade deficit with your grocery store: Each year, you sell roughly $0 worth of goods to your local Costco or Aldi, while purchasing hundreds (if not thousands) of dollars worth of foodstuffs from them. Yet it does not follow that you are “losing” hundreds of dollars on trade with your grocer annually — the money you give them secures you life-sustaining products. By Trump’s logic, American consumers could comfortably cease all trade with US grocery stores — and therefore win a “trade war” with those grocers — since shoppers “lose” money on transactions with such retailers. Yet money is only useful to the extent it can be exchanged for goods and services. Bread has more utility to a starving man than a wallet full of $20s. Of course, trade between consumers and their local retailers is not perfectly analogous to trade between America and China. But Trump’s idea that buyers always have the upper hand is actually even _more_ misguided when applied to the US-China relationship. Your local Kroger needs to sell things to Americans in order to exist. The same is not true of China, which sells [only about 15 percent](https://www.atlanticcouncil.org/blogs/new-atlanticist/china-is-ready-to-eat-bitterness-in-the-trade-war-what-about-the-us/) of its exports to the United States. Without question, Trump’s tariffs will heap pain upon an already faltering Chinese economy. But ultimately, China needs our dollars less than we need its goods, minerals, and industrial inputs. Compensating for a decline in consumer demand is a fairly simple task. Money is not technically difficult to generate: China can partially offset the impact of lost sales to Americans by helping its own people spend more through policies that discourage saving, boost wages, and increase income redistribution. At the same time, China can work on increasing its exports to the rest of the world (a task [it is currently pursuing](https://www.ft.com/content/b7c09ffb-5390-426e-97d8-3888acbc55f2)). By contrast, it is not _technically possible_ for the United States to swiftly replace what we gain from trade with China. Beijing has sought to hammer home this point in recent days [by abruptly choking off exports](https://www.washingtonpost.com/business/2025/04/24/rare-earths-trade-war-us-china/) of rare earth minerals and magnets to the United States. Such elements are indispensable for manufacturing electronics, batteries, military drones, and countless other essential goods. And America cannot get many of these minerals from anywhere else, at least not at the necessary scale. According to one expert who spoke with [the Washington Post,](https://www.washingtonpost.com/business/2025/04/24/rare-earths-trade-war-us-china/) developing a China-free supply chain for all rare earths would take “10 to 15 years.” Many US manufacturers will exhaust their stockpiles of these minerals within the next couple months. And America’s dependence on Chinese industry extends well beyond elements. We also rely on China for [electronics](https://www.atlanticcouncil.org/blogs/econographics/sinographs/the-united-states-has-trade-leverage-with-china-but-not-as-much-as-washington-thinks/), [pharmaceutical ingredients,](https://www.wsj.com/opinion/the-bitter-pill-of-reliance-of-china-reliance-supply-chain-drugs-medications-cc961e00) and [myriad other goods](https://merics.org/en/report/growing-asymmetry-mapping-import-dependencies-eu-and-us-trade-china?utm_source=chatgpt.com). A government can increase consumer demand almost instantly by electronically depositing money into its citizens’ bank accounts. By contrast, there is no button that the US can push to instantly replace the physical products that China provides us. To the extent that Trump has a strategy for winning his trade war with China, it involves conscripting America’s allies into the fight. The administration says it aims to strike trade deals with the European Union, Japan, and other friendly countries [and then](https://www.bloomberg.com/news/articles/2025-04-09/bessent-sees-a-deal-with-allies-then-group-approach-on-china) “approach China as a group.” It also plans to ask its allies to [reduce economic ties](https://www.bloomberg.com/news/articles/2025-04-16/us-looks-to-box-in-china-by-recruiting-other-trading-partners) with China, as a condition of securing relief from Trump’s tariffs. It is true that America and its allies have some mutual economic grievances against China, which has threatened Western export industries by “[dumping](https://www.trade.gov/press-release/us-department-commerce-finds-dumping-and-countervailable-subsidization-collated-steel)” products below cost onto global markets. Nevertheless, America’s allies display little appetite for an economic showdown with China. On Thursday, Bloomberg [reported](https://www.bloomberg.com/news/articles/2025-04-24/japan-to-resist-trump-efforts-to-form-trade-bloc-against-china) that Japan intends to “push back against any US effort to bring it into an economic bloc aligned against China,” due to the importance of its trade relationship with Beijing. Likewise, the European Commission [said this week](https://www.euronews.com/my-europe/2025/04/22/eu-wont-decouple-from-china-as-condition-for-reaching-trade-deal-with-trump) that it has no intention of “decoupling” from China. The reasons for this reluctance to break with China are not difficult to discern. Japan and the EU are no less dependent on Chinese exports of key minerals and goods than the United States is. And at this point, they have little reason to believe that the US is a more reliable trade partner than China. Beijing is not waging war against Europe’s exporters to protest [largely fictional trade barriers](https://www.cnbc.com/2025/03/31/as-trump-reciprocal-tariffs-near-economists-say-vats-arent-trade-barrier.html); Washington is. So why pursue closer economic alignment with the US at the expense of trade relations with China? Trump’s diplomatic task is made all the more difficult by his failure to articulate a clear set of demands. It is not evident precisely what America’s allies are supposed to be uniting against China to achieve. Trump’s ostensible complaint is that the US runs a trade deficit in goods with China. But it is difficult to conceive how such a deficit could be fully eliminated, given the structural characteristics of each nation’s economy — and even harder to understand what interest Europe or Japan would have in eliminating that deficit. The final reason why the Chinese government has the upper hand in Trump’s trade war is that it will face less domestic political pressure to relent. This is partly because China’s authoritarian government doesn’t need to worry about the next election. But it also reflects the fact that America is unambiguously the aggressor in this fight. Trump’s tariffs weren’t triggered by any particular Chinese action, even if they are partly inspired by Beijing’s genuine trade violations over the past two decades. Xi Jinping therefore should have little difficulty persuading much of the Chinese public to blame Trump for any contraction in their nation’s export industries. In fact, Trump’s tariffs may actually _help_ Xi politically by enabling him to deflect public discontent about economic conditions away from the Chinese Communist Party and [toward the United States](https://www.msn.com/en-us/news/world/beijing-stokes-patriotic-fervor-and-blames-u-s-for-trade-war/ar-AA1DcCVF). For Trump’s party, on the other hand, his trade war already looks politically devastating. Public approval of Trump’s economic management has fallen to 37 percent in [Reuters-Ipsos’s polling](https://www.reuters.com/data/trumps-approval-rating-2025-01-21/), his lowest mark ever in that survey. An [Economist-YouGov](https://d3nkl3psvxxpe9.cloudfront.net/documents/econTabReport_iR37dyy.pdf#page=33) poll, meanwhile, shows Americans saying Trump’s economic actions have hurt them personally more than they’ve helped by a 30-point margin. And these results are consistent with [those of other surveys](https://www.washingtonpost.com/politics/2025/04/23/trumps-economic-numbers-turn-dismal/). Critically, the real economic effects of Trump’s trade war with China have barely been felt yet. Manufacturers and retailers have been able to draw on their stockpiles of Chinese wares, delaying the shortages and price spikes that a sustained trade war will produce. If Trump stays the course, it is likely that his approval will fall much lower, jeopardizing the GOP’s fragile grip on the House if not the Senate. For all these reasons, China does not feel compelled to rush to the negotiating table. Xi seems to believe that time is on his side — the longer this trade war drags on, the more desperate Trump will become for a deal. Judging by the White House’s increasingly conciliatory rhetoric — and strained attempts to demonstrate progress toward a settlement — the Chinese president seems to be right. See More: * [Donald Trump](https://www.vox.com/donald-trump) * [Economy](https://www.vox.com/economy) * [Money](https://www.vox.com/money) * [Politics](https://www.vox.com/politics) * [Trump Administration](https://www.vox.com/trump-administration)

When it comes to the escalating trade war with China, the most obvious historical analogy for the US launching an all-out economic assault on a rising military power in East Asia is not an encouraging one. Starting in 1940, the US, alarmed by Imperial Japan’s invasion of China and burgeoning alliance with Nazi Germany, began passing a series of increasingly severe restrictions on exports of the raw materials needed by the Japanese military. These eventually culminated in a complete freeze on Japanese funds and assets held in the US and an embargo on oil exports. The hope was that this would force Japan, overwhelmingly dependent on energy imports, to curb its military ambitions. Instead, believing war with the United States to be inevitable, the Japanese launched a preemptive strike on the American fleet at Pearl Harbor. We’re not quite there yet, but it’s worth keeping in mind that the trade war between the world’s two most powerful countries is taking place within the context of growing military tension. Just as President Donald Trump was first announcing his tariffs at the beginning of April, the Chinese military was wrapping up its [latest live-fire drills](https://www.reuters.com/world/asia-pacific/china-drills-around-taiwan-continue-gives-them-code-name-strait-thunder-2025-04-02/) around Taiwan. Though demonstrations like these have become relatively common as [tensions have grown in the Taiwan Strait](https://www.vox.com/world-politics/390895/china-taiwan-conflict), the latest drills were significantly larger and, [some analysts believe](https://thediplomat.com/2025/04/recent-pla-exercises-revealed-chinas-operational-plan-for-a-taiwan-strait-conflict/), revealed significant details about the tactics China is likely to use to take the island. Those drills came along with recent reports of “[invasion barges](https://www.nytimes.com/2025/04/01/world/asia/china-invasion-barges-taiwan.html)” China may use to bring troops ashore on Taiwan, accusations that Chinese ships are intentionally severing undersea [internet cables](https://www.cnn.com/2025/02/25/asia/taiwan-detains-ship-undersea-cable-intl-hnk/index.html), and a host of flare-ups in long-running territorial conflicts involving China’s neighbors [Japan](https://thediplomat.com/2025/03/china-coast-guard-makes-its-longest-intrusion-into-disputed-east-china-sea-waters/) and the [Philippines](https://www.scmp.com/news/china/military/article/3307831/china-coastguard-claims-sovereign-jurisdiction-sandy-cay-south-china-sea). The juxtaposition of these shows of military dominance with Trump’s “Liberation Day” — led by a 54 percent tariff on Chinese goods, which has since risen to 145 percent as China has retaliated with tariffs of its own — is a reminder that the trade war can’t be separated from wider geopolitical tensions. Though they’re sometimes discussed as somewhat separate issues in the US, the Chinese government has made clear it sees little distinction. “If war is what the U.S. wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end,” China’s foreign ministry posted on X after the White House [announced the first round of tariffs](https://x.com/MFA_China/status/1896904623589621816) in March. While [recent comments from](https://www.cnn.com/2025/04/22/business/trump-china-trade-war-reduction-hnk-intl/index.html) the White House and [reports from Beijing suggest](https://www.bloomberg.com/news/articles/2025-04-25/china-weighs-exempting-some-us-goods-from-tariffs-as-costs-rise?sref=C3P1bRLC) the two sides may be looking to cut back on at least some of the tariffs, it’s hard to imagine that the world’s most important economic relationship will return entirely to normal or that the tension won’t spill over into noneconomic areas. “Trump clearly thinks that he can separate economics and security issues, and I think the Chinese will want to demonstrate that that’s not the case.” said Zack Cooper, a senior fellow studying US-China competition at the American Enterprise Institute. Cooper says experts were already concerned about China testing the new administration’s response to a regional provocation, and that the atmosphere of mistrust and uncertainty created by the tariff war adds to the risks of a crisis spiraling out of control. In short, we’re forced to confront the question of whether the trade war could make a real war more likely. Many of the officials Trump has appointed to senior positions — including his secretary of state and national security adviser — are considered China hawks, but a notable feature of the president’s second term has been the relative lack of focus [on competition with China](https://www.economist.com/china/2025/04/15/china-hawks-are-losing-influence-in-trumpworld-despite-the-trade-war) outside of trade policy. “China hawks are losing influence in Trumpworld,” ran the headline of a [recent Economist article](https://www.economist.com/china/2025/04/15/china-hawks-are-losing-influence-in-trumpworld-despite-the-trade-war), which notes that even some of the most hardline voices in the administration have recently moderated their tone, saying Taiwan is not an “existential” issue for the US, for instance. Trump himself has been [equivocal about whether the US](https://www.brookings.edu/articles/how-would-the-trump-or-harris-administration-approach-taiwan/) should defend Taiwan, has threatened to withdraw troops from [US allies like South Korea and Japan](http://reuters.com/world/trump-includes-us-troop-costs-tariff-talks-with-asian-allies-2025-04-17/) as leverage in trade talks, and the US military has actually moved some valuable [military resources _out_ of](https://www.vox.com/world-politics/410186/trump-yemen-houthis-rough-rider) East Asia. The contrast between Trump’s rhetoric and that of Joe Biden — who made competition with an [axis of autocracies led by China](https://www.vox.com/world-politics/397741/axis-upheaval-crinks-china-russia-iran-north-korea) a central motif of his presidency — is striking. The only mention of China in Trump’s inaugural address was in the context of Panama. This doesn’t mean Trump has _de-_escalated. China remains the “pacing challenge” for the Pentagon under Secretary of Defense Pete Hegseth, and Hegseth himself recently [visited Japan and the Philippines](https://www.nytimes.com/2025/03/30/world/asia/hegseth-japan-military.html) to discuss bolstering alliances to counter an increasingly assertive People’s Republic. The latest House Republican defense spending proposal [contains $11.1 billion](https://thehill.com/policy/defense/5270979-house-republicans-pentagon-spending/?email=467cb6399cb7df64551775e431052b43a775c749&emaila=12a6d4d069cd56cfddaa391c24eb7042&emailb=054528e7403871c79f668e49dd3c44b1ec00c7f611bf9388f76bb2324d6ca5f3&utm_source=Sailthru&utm_medium=email&utm_campaign=04.28.25%20%E2%80%94%C2%A0Defense%20%26%20National%20Security) for Pacific deterrence. But there’s no indication that Trump is looking for a military conflict with China — or that China is interested in one with the US. Trump’s advisers say he’s interested in [sitting down for “man-to-man”](https://www.nytimes.com/2025/02/19/business/economy/trump-china-trade-deal.html) talks with Chinese leader Xi Jinping that could encompass trade as well as other issues, such as nuclear security. But the Chinese, [confident in their ability to weather the tariffs](https://www.vox.com/politics/410471/trump-tariffs-china-trade-war-negotiations), have shown no interest in leader-to-leader talks, instead [launching a diplomatic offensive](https://www.bloomberg.com/news/articles/2025-04-29/xi-is-trying-to-turn-world-against-us-as-trump-cuts-trade-deals?sref=C3P1bRLC) to attempt to dissuade other governments from cutting their own deals with Washington. The Chinese government has a longstanding and deeply held belief that US military and economic policy are aimed at preventing China from achieving its rightful status as a regional and global military power. And Trump’s tariffs are no exception. “The Chinese view the trade war as a means to suppress their economic development and to isolate them from global trade,” said Amanda Hsiao, China director at the Eurasia Group. Most experts don’t believe China would use military force as a direct response to trade policy. China is not going to invade Taiwan to get Trump to abandon his tariffs, in other words. But the tariffs raise the likelihood of miscalculation. “What I worry about is that Chinese respond to some action we’ve taken on Taiwan that gets misinterpreted as a response to an action to the trade war,” said Evan Medeiros, former senior director for Asia on the White House National Security Council, during a panel discussion last week. “In a situation like we have today, where communication channels are almost zero, the prospects for a serious strategic miscommunication leading to a military action is very, very serious.” Senior US and Chinese military officials [held their semiannual talk](https://www.reuters.com/world/us-chinese-military-officials-hold-talks-shanghai-2025-04-03/) in Shanghai meant to address just those sorts of miscalculations on April 3, the day after the tariffs were announced. Hsiao said that whether more talks like these are held going forward will be a good indication of whether the tariffs have had a serious impact on the security relationship. The regular meetings had been [suspended by China](https://thediplomat.com/2022/08/china-suspends-military-dialogues-climate-change-talks-with-us/) — along with a range of other forms of cooperation, including talks on climate change and fentanyl — as a reaction to then-House Speaker Nancy Pelosi’s controversial visit to Taiwan in 2022. One reason that it will be difficult to entirely compartmentalize the tariff war and military competition is that — despite its best efforts — US military supply chains are [still dependent on technology and raw materials](https://www.defenseone.com/defense-systems/2024/06/mixed-results-us-military-efforts-reduce-dependence-china/397368/) from China. In recent days, senior US officials have reportedly been scrambling to address the fallout from China’s new restrictions on the export of so-called [rare earth metals](https://www.washingtonpost.com/business/2025/04/24/rare-earths-trade-war-us-china/) — vital for a number of industries, including the defense contractors that manufacture drones and other cutting-edge systems for the US military. The fact that the US may be at least partly reliant on China to build [the drones it wants in order to potentially fight China](https://www.vox.com/world-politics/24107959/replicator-drones-china-taiwan-ukraine-pentagon) highlights the most bizarre difference between the US-China relationship and previous instances of superpower competition: Never before have two military rivals been this economically dependent on each other. Perhaps no one sums up this contradiction more than Trump’s billionaire ally Elon Musk, who has made himself an invaluable component of the US military-industrial complex even as his [business empire is deeply reliant](https://www.vox.com/world-politics/404621/elon-musk-china-tesla-trump) on China. America’s economic reliance on a country that poses a potential major military threat is one reason both Republican and Democratic politicians have called for “decoupling” the two economies, or at least “friendshoring” — encouraging US companies to deepen their ties with US allies rather than adversaries. This now appears, to a large extent, to be happening. In one dramatic development this past week, Apple announced [that it will shift assembly](https://www.ft.com/content/c2be45b8-cfad-4cbb-9a1a-bfd0626be372) of US iPhones — an emblem of US-Chinese economic integration if there ever was one — to India. But are there downsides to decoupling? Economic interdependence has also created more points of dialogue between the US and China — at the government, business, and civil society levels — and quite literally raised the costs of increasing tension. “If the tariff war continues in its current format, most likely we’re looking at the decoupling of the two economies, and that will give the two countries potentially less incentive to try to work out issues together,” said Yun Sun, director of the China program at the Stimson Center. That will lead to a situation, she said, where “the only thing to prevent the US and China from going to war is war itself.” The horror of war itself, she noted, is still a pretty serious incentive to avoid war. After all, the US and Soviet Union avoided war for 40 years, not because they were concerned about the global economy but because it could have been literally apocalyptic, as they [could be with a US-China war today](https://www.vox.com/the-highlight/392807/nucear-risk-weapons-arms-race). But given the stakes of a potential miscalculation, the dangers of losing some of the few remaining [points of contact between the two sides should not be dismissed](https://www.vox.com/china/363849/us-china-new-cold-war-ambassador-nicholas-burns). The idea that trade can prevent war, or at least make it less likely, is not a new one. “It is commerce which is rapidly rendering war obsolete, by strengthening and multiplying the personal interests which are in natural opposition to it,” philosopher John Stuart Mill [wrote in 1848](https://historyofeconomicthought.mcmaster.ca/mill/prin/book3/bk3ch17). Obviously, this prediction was a bit premature, and the “[capitalist peace](https://pages.ucsd.edu/~egartzke/publications/gartzke_ajps_07-1.pdf)” theory has always had a few exceptions. Contra Thomas Friedman’s famous [“Golden Arches” theory](https://foreignpolicy.com/2020/11/26/mcdonalds-peace-nagornokarabakh-friedman/), a number of countries with McDonald’s have, in fact, gone to war with one another, most recently in Ukraine. But it’s also hard to believe it’s a coincidence that international wars — as opposed to internal civil conflicts — became exceedingly rare in the last few decades of the 20th century, just as economic globalization in tandem with the [exponential growth of international trade](https://www.wto.org/english/res_e/statis_e/trade_evolution_e/evolution_trade_wto_e.htm). Trump’s assault on the international trading system comes at a time when the number of conflicts, including international ones, are [starting to creep up again](https://www.vox.com/world-politics/2024/1/25/24049551/war-increasing-ukraine-gaza-sudan-ethiopia), and tensions between the world’s superpowers are already at a worryingly high level. “We are in terra incognita a bit,” said Medeiros. “The US hasn’t had this kind of trade war with any country since the 1930s, so we’re all sort of walking around in a very dark room trying to understand how the actors are going to behave.” See More: * [China](https://www.vox.com/china) * [Politics](https://www.vox.com/politics) * [Trump Administration](https://www.vox.com/trump-administration) * [World Politics](https://www.vox.com/world-politics)

China has vowed to “safeguard international fairness and justice” in upcoming talks with the United States in Switzerland, the first meeting between the two countries to discuss trade war that has roiled the global economy since US president Donald Trump unveiled [sweeping tariffs](https://www.theguardian.com/us-news/trump-tariffs) last month. China’s vice-premier He Lifeng will meet US treasury secretary [Scott Bessent](https://www.theguardian.com/us-news/2025/apr/27/trump-tariffs-china-negotiations) on the sidelines of meetings in Switzerland between 9 and 12 May. US trade representative Jamieson Greer will also attend. China’s commerce ministry said on Wednesday the agreement to talk followed the US side [taking the initiative](https://www.theguardian.com/us-news/2025/may/02/china-evaluating-us-offer-to-engage-in-trade-negotiations) to approach China. Beijing and Washington have presented [conflicting accounts](https://www.theguardian.com/us-news/2025/may/01/us-has-approached-china-seeking-talks-on-trump-tariffs-says-state-social-media) about which side initiated talks. China said it agreed to send He for talks after a consideration of “Chinese interests and the appeals of US industry and consumers”. “If the US wants to resolve the issue through negotiation, it must face the serious negative impact of unilateral tariff measures on itself and the world,” China’s commerce ministry said. Bessent said on Tuesday the talks would be focused on de-escalating the trade war, rather than negotiating any deal. “We will agree what we’re going to talk about. My sense is that this will be about de-escalation, not about the big trade deal,” Bessent told Fox news. “This isn’t sustainable,” he said. Since Trump took office in January, he has unleashed a wave of tariffs on China and other countries, which risk upending the global economic order and undermining the foundation of stable relations between the world’s two largest economies. US tariffs on Chinese imports have now reached 145%, with Chinese counter-tariffs reaching 125%. Both sides have implemented a number of exemptions to [soften the blow](https://www.theguardian.com/world/2025/apr/25/xi-announces-plan-chinese-economy-us-trade-war) on their respective economies. The US exempted smartphones and some other electrical products, following reports that the price of an iPhone in the US could increase by more than 40%. China, meanwhile, has exempted select pharmaceuticals, microchips and aircraft engines, along with other undisclosed items that are [reportedly](https://www.reuters.com/world/china/china-creates-list-us-made-goods-exempt-125-tariffs-sources-say-2025-04-30/) being included on a “whitelist” that has not been made public. But the economic impact of the trade war remains severe. China’s [factory activity slowed in April](https://www.theguardian.com/us-news/2025/apr/30/china-manufacturing-activity-plummets-amid-trump-tariff-war), which analysts said reflected the trade war making it much harder to ship goods to the US. This month the US also [closed](https://www.theguardian.com/us-news/2025/may/02/why-is-trump-ending-de-minimis-tariff-loophole-low-value-goods) a loophole that had allowed low-value goods to be shipped to the US free, a regime which had generated $66bn for the Chinese economy in 2023, according to a report from the US Congress. The World Trade Organization estimates that Chinese exports to the US, which were worth $440bn last year, will fall by 77% this year if the tariffs remain in place. China has repeatedly vowed to “fight to the end” in the trade war, with leaders betting their country can withstand more economic pain if necessary than Americans would be willing to tolerate. Beijing is also trying to woo other countries, presenting itself as a stable partner in contrast to a capricious US. “China notes that some economies are also in talks with the US,” China said on Wednesday. “We need to stress that appeasement cannot be turned into peace, and compromise cannot be respected”.

 HONG KONG — U.S. and Chinese officials have announced they will meet in Switzerland later this week, signaling a possible détente in the escalating trade war between the global superpowers. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer will meet Beijing's lead economic representative, He Lifeng, potentially paving the way for broader trade talks. In an [appearance on Fox News](https://www.foxnews.com/video/6372438997112), Bessent said the current tariffs aren't sustainable and are "the equivalent of an embargo. "We don't want to decouple. What we want is fair trade," he said. The U.S. and China have been locked in a tit-for-tat trade war, with both sides imposing hefty, triple-digit tariffs on each other's goods, making trade between the world's two largest economies near impossible. Investors and global policymakers will be looking for any signs of an off-ramp, as the ongoing trade war threatens a global recession. China and the U.S. "need to move on," said Alicia Garcia-Herrero, chief economist for the Asia Pacific at French bank Natixis. "I think both parties are keen to negotiate." President Trump placed what he called reciprocal tariffs on China and many other countries in early April. When China retaliated with similar duties on U.S. goods, Trump responded with even higher tariffs. At the moment, Chinese goods into the U.S. face [tariffs of 145%](https://www.npr.org/2025/04/09/nx-s1-5357645/trump-tariffs-paused), and U.S. goods into China are subject to [125% tariffs](https://www.npr.org/2025/04/12/g-s1-59682/trump-tariffs-farmers-china). In recent weeks, the U.S. and China have been engaged in a geopolitical blinking contest, waiting for the other side to reach out. Trump said in an [interview with Time](https://time.com/7280114/donald-trump-2025-interview-transcript/) that he would not call Chinese President Xi Jinping, and added that Xi has in fact called him. Chinese officials [refuted](https://www.mfa.gov.cn/eng/xw/fyrbt/lxjzh/202504/t20250428_11606273.html) that claim, and later said that the U.S. has made [multiple overtures](https://www.npr.org/2025/05/02/nx-s1-5384770/china-us-trade-talks-tariffs-trump) seeking trade negotiations. The talks in Switzerland are the first concrete sign of a potential thaw in the deadlock. For the negotiations to yield substantial results, the U.S. must adopt "a proper attitude," political commentator Ming Jinwei said in an editorial published on Guancha, a Chinese news site which often reflects perspectives aligned with Chinese state interests. Ming added that Treasury Secretary Bessent needs to reassess his understanding of China's strength. "He has repeatedly claimed that China needs the U.S., but the U.S. does not need China. This perception is both incorrect and arrogant," he wrote. With both sides already [feeling the effects](https://www.npr.org/2025/05/04/nx-s1-5383315/ports-brace-for-the-impact-of-tariffs-as-shipments-from-china-drop-drastically) of [the trade war](https://www.npr.org/2025/05/05/nx-s1-5382336/orville-schell-expert-on-u-s-china-relations-discusses-trade-war-between-countries), Garcia-Herrero predicts a trade deal will be struck quickly, with the U.S. removing the steep reciprocal tariffs but keeping 20% duties on Chinese goods. "The deal will be announced as a minor thing because they have convinced their constituencies that the other side is evil," Garcia-Herrero said. "So they cannot really change that mantra now." A spokesperson for China's commerce ministry said on Wednesday that China's door remains "open for negotiation" but that it will not "sacrifice its principles" for just any agreement. _NPR's Aowen Cao contributed to this report._

Chinese trade with the United States slumped in April even as its total exports beat forecasts, official figures show, as trade representatives from both nations prepared to meet this weekend in the midst of a gruelling trade war between the superpower rivals. Exports to the United States – one of China’s top trading partners – fell 17.6% in April, data showed. Against that backdrop, analysts polled by Bloomberg had expected exports to rise just 2% year-on-year last month. However they beat expectations, coming in at 8.1%. “The damage of the US tariffs has not shown up in the trade data in April,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said in a note. “This may be partly due to transshipment through other countries, and partly because of trade contracts that were signed before the tariffs were announced,” he added. [ China to cut interest rates in response to trade war with US ](https://www.theguardian.com/business/2025/may/07/china-to-cut-interest-rates-in-response-to-trade-war-with-us) “I expect trade data will weaken in the next few months gradually.” [Trade between the world’s two largest economies has slowed](https://www.theguardian.com/world/2025/may/07/china-us-trump-tariffs-trade-talks) considerably since US president [Donald Trump imposed various rounds of tariffs](https://www.theguardian.com/us-news/trump-tariffs) on China. Levies on many Chinese products now reach as high as 145% – with cumulative duties on some goods soaring to a staggering 245%. Beijing has responded with 125% tariffs on imports of US goods, along with other measures targeting American firms. US treasury secretary Scott Bessent and trade representative Jamieson Greer are set to meet Chinese vice premier He Lifeng in Switzerland on Saturday and Sunday, marking [the first talks between the superpowers](https://www.theguardian.com/us-news/2025/may/02/china-evaluating-us-offer-to-engage-in-trade-negotiations) since Trump unveiled his tariffs. On Thursday, Britain became the first to [announce a deal with the US](https://www.theguardian.com/politics/2025/may/08/trump-and-starmer-confirm-breakthrough-us-uk-trade-deal) that reduces tariffs on British cars and lifts them on steel and aluminium, while in return Britain will open up markets to US beef and other farm products. But analysts said traders were more excited about the Republican leader’s comments on the upcoming talks with China in which he hinted at an easing of the stiff measures aimed at the world’s number two economy. Trump told reporters that he thought the negotiations would be “substantive” and when asked if reducing the levies was a possibility, he said “it could be”. “We’re going to see. Right now you can’t get any higher. It’s at 145% so we know it’s coming down. I think we’re going to have a very good relationship.” Speaking on Friday, deputy foreign minister, Hua Chunying, said China had full confidence in its ability to manage US trade issues. “We have no fear,” Hua told reporters, adding that the trade policy of the US administration could be sustained. “We do not want any kind of war with any country. But we have to face up to the reality. As you can see, people have full confidence in our capability to overcome all the difficulties … Ordinary people in the US already feel [suffering from the tariff war](https://www.theguardian.com/us-news/2025/may/08/small-farms-trump-tariffs).” April’s economic data also showed that China’s imports also beat expectations, dropping 0.2%, compared with the 6% slide analysts had estimated. Purchases from overseas were also being closely watched as a key gauge of consumer demand in China, which has remained sluggish. _With Reuters and Agence France-Presse_

The trade war agreement won’t be enough to avoid price hikes, a Federal Reserve governor said Monday. “Trade policies are evolving and are likely to continue shifting,” Fed governor Adriana Kugler said during a [speech](https://www.federalreserve.gov/newsevents/speech/kugler20250512a.htm) in Dublin in one of the biggest understatement’s of the year so far. Kugler said high tariffs would “primarily act as a negative supply shock,” spurring inflation, decreasing wages, and lowering growth. Fellow Fed governor Michael Barr made similar [comments](https://www.bloomberg.com/news/articles/2025-05-09/fed-s-barr-warns-tariffs-risk-higher-inflation-unemployment?sref=P6Q0mxvj) on Friday. New York Federal Reserve president John Williams [said](https://www.reuters.com/markets/us/feds-williams-says-tariffs-will-push-up-inflation-unemployment-2025-04-11/) last month that he expects tariffs to bump inflation up to 4%; it was 2.4% as of [March](https://www.usinflationcalculator.com/inflation/current-inflation-rates/). Just before Kugler gave her speech in Dublin, the U.S. and China announced a [deal](https://qz.com/us-china-trade-war-deal-tariffs-stocks-markets-1851780188?_gl=1*sj85ci*_ga*NDg3NDc1NjAzLjE3MjY1OTIyNzQ.*_ga_V4QNJTT5L0*czE3NDcwNTQ2MzEkbzI0MSRnMSR0MTc0NzA1OTU2MyRqNjAkbDAkaDA.) to crawl back some of the spiralling tariffs in the trade war of recent months. The U.S. will temporarily reduce tariffs on Chinese goods to 30%, down from 145%, while China will lower tariffs on American products to 10%, down from 125%. Last Wednesday, China [cut](https://qz.com/china-central-bank-interest-rates-tariffs-1851779496) its interest rates to stimulate spending amid the trade war. The same day, the Federal Reserve left the interest rate [unchanged](https://www.cnbc.com/2025/05/07/fed-rate-decision-may-2025.html) at 4.25%, while it waited to see the impact of President Donald Trump’s erratic trade policy. The Fed cited a steady unemployment rate and expanded economic activity as positive signs. In April, 177,000 non-farm jobs were [added](https://www.bls.gov/news.release/pdf/empsit.pdf) to the U.S. economy — despite massive layoffs happening in the public service. The next day, Trump [said](https://www.bnnbloomberg.ca/tariffs/2025/05/08/trump-agrees-to-cut-tariffs-on-uk-autos-steel-and-aluminum-in-a-planned-trade-deal-with-britain/) that Federal Reserve chair Jerome Powell didn’t want to lower interest rates “because he’s not in love with me.”

Tariffs or no tariffs, Apple ([AAPL\-0.39%](https://qz.com/quote/AAPL)) wants to raise the prices of iPhones — and plans to do everything possible not to blame President Donald Trump for the hike. The Wall Street Journal ([NWSA\-0.90%](https://qz.com/quote/NWSA)), citing unnamed sources familiar with the matter, reports that [Apple will tie the price hikes to design changes and new features](https://www.wsj.com/tech/apple-iphone-price-increase-2eaebb14) to avoid all talk of the trade war. The report comes after Washington and Beijing [struck a deal to temporarily cut tariffs dramatically](https://qz.com/us-china-trade-war-deal-tariffs-stocks-markets-1851780188). The agreement, [announced early Monday](https://qz.com/nasdaq-dow-djia-sp500-stocks-us-china-trade-war-deal-1851780161?_gl=1*v10png*_ga*NDg3NDc1NjAzLjE3MjY1OTIyNzQ.*_ga_V4QNJTT5L0*czE3NDcwNTQ2MzEkbzI0MSRnMSR0MTc0NzA1ODkwMSRqNjAkbDAkaDA.) after [weekend talks in Geneva](https://qz.com/u-s-china-trade-talks-geneva-bessent-1851779951), marked a pivotal step toward deescalating a trade war that has disrupted global supply chains, rattled financial markets, and strained relations between the U.S. and China, not to mention with other American trading partners. Under the terms of the truce, the U.S. will cut tariffs on Chinese goods from 145% to 30%, while China will reduce tariffs on American imports from 125% to 10%. That’s good news for Apple, which makes most of its products in China. Still, the U.S. tariffs on Chinese imports still include a 20% levy from before the latest escalation in the trade war. Trump said at the time that that levy was meant to combat the fentanyl crisis. Apple CEO Tim Cook, who attended Trump’s inauguration, has avoided taking a harsh stance on the president’s trade war despite analyses that it could cost his company hundreds of millions of dollars each quarter. Reports said that iPhone prices could rise thousands of dollars under Trump’s original plan, and Apple reportedly flew in a large stock of its phones before the tariffs were set to take place. Cook also said more iPhones sent to the U.S. would come from Indian factories. Apple plans to release a new iPhone in the fall, The Journal reports, and the more premium models will remain manufactured in China. The company is reportedly trying to figure out if it could start making the phones in the U.S., but that process would take years.

 The [U.S.-China tariff truce](https://qz.com/us-china-trade-war-deal-tariffs-stocks-markets-1851780188) kicked off [a $700 billion rally in Big Tech stocks](https://qz.com/aapl-goog-nvda-tsla-nasdaq-tech-stocks-trade-war-deal-1851780167) on Monday, as the Nasdaq led outpaced other indexes with a 3.5% surge. But not all analysts are convinced the trade war accomplished anything beyond creating a problem that markets are now celebrating the temporary suspension of. The new agreement, announced early Monday after weekend U.S.-China talks in Switzerland, includes [a 90-day pause on new tariffs and sharp rollbacks on existing duties](https://qz.com/us-china-trade-war-deal-tariffs-stocks-markets-1851780188) — moves that [sent stocks skyrocketing](https://qz.com/nasdaq-dow-djia-sp500-stocks-us-china-trade-war-deal-1851780161). Here’s what analysts are saying about the deal. Wedbush calls trade truce ‘dream scenario’ ------------------------------------------ In a note released early Monday, analysts at Wedbush called the agreement a “dream scenario” for stocks, [especially tech](https://qz.com/aapl-goog-nvda-tsla-nasdaq-tech-stocks-trade-war-deal-1851780167). While “supply chain and economic damage has been done,” they wrote, Wall Street is likely to “focus on normalized growth post this volatile six-week period,” with a near-term recession likely “off the table.” They added: “This is very bullish news for the tech trade… although there is more wood to chop around chip restrictions (H20/Nvidia) and other issues in the AI trade.” Still, the rhetorical win leaves deeper questions unresolved ------------------------------------------------------------ “It just seems like it’s a different story every day,” a former Morgan Stanley ([MS](https://qz.com/quote/MS)) analyst told Quartz. “I don’t know how business leaders can really make any plans when policy changes so much from week to week or even day to day. “Hopefully the tariffs stay off. The market reaction shows how important that is.” As The Kobeissi Letter [pointed out](https://x.com/KobeissiLetter/status/1921910115596136573/photo/1), tariffs hit 145% barely a month ago — when the S&P 500 was 200 points lower, [recession chatter was peaking](https://qz.com/recession-risk-predict-trump-tariffs-inflation-economy-1851769081), and Wall Street priced in four Federal Reserve interest rate cuts for 2025. Now tariffs are rolled back to 30%, and sentiment has flipped entirely. “Sentiment is everything,” the post concluded. Economists also voiced skepticism --------------------------------- [Speaking to The Wall Street Journal](https://www.wsj.com/livecoverage/stock-market-today-tariffs-trade-war-05-12-2025/card/the-tariff-climbdown-six-takeaways-from-economists-and-analysts-P51wmOatEo8B33IMBlIO), ING’s ([ING](https://qz.com/quote/ING)) Inga Fechner warned that the 90-day pause might be short-lived and could actually widen the trade deficit. Mark Williams at Capital Economics similarly noted that China hasn’t offered meaningful concessions. “It will be interesting to see whether China is willing to offer anything substantive in these talks, but I can’t see that they’ll feel under a huge amount of pressure to do so,” he told [The Journal](https://www.wsj.com/livecoverage/stock-market-today-tariffs-trade-war-05-12-2025/card/the-tariff-climbdown-six-takeaways-from-economists-and-analysts-P51wmOatEo8B33IMBlIO?mod=WSJ_home_supertoppermiddle_lctimeline). “China has successfully called Trump’s bluff.” Williams said that even with the new arrangement — assuming it lasts — the result will still be reduced trade between the U.S. and China. In short, there’s a bull run now. But a real victory? That’s still far from established.

The U.S. and China have agreed to suspend and roll back most of their sky-high reciprocal tariffs for 90 days while negotiations continue, a significant move to ease weeks of escalating trade war tensions. The agreement, [announced early Monday](https://qz.com/nasdaq-dow-djia-sp500-stocks-us-china-trade-war-deal-1851780161?_gl=1*v10png*_ga*NDg3NDc1NjAzLjE3MjY1OTIyNzQ.*_ga_V4QNJTT5L0*czE3NDcwNTQ2MzEkbzI0MSRnMSR0MTc0NzA1ODkwMSRqNjAkbDAkaDA.) after [weekend talks in Geneva](https://qz.com/u-s-china-trade-talks-geneva-bessent-1851779951), marked a pivotal step toward deescalating a trade war that has disrupted global supply chains, rattled financial markets, and strained relations between the U.S. and China, not to mention with other American trading partners. Officials in both Washington and Beijing have said they will continue working to hash out a more permanent solution. What’s in the deal? ------------------- Under the terms of the truce, the U.S. will cut tariffs on Chinese goods from 145% to 30%, while China will reduce tariffs on American imports from 125% to 10%. The U.S. tariffs on Chinese imports still include a 20% levy from before the latest escalation in the trade war. President Donald Trump said at the time that that levy was meant to combat the fentanyl crisis. The agreement significantly reduces the average U.S. tariff on Chinese goods to approximately 27%, bringing the U.S. weighted average tariff rate down to around 12%, a notable decline from a peak of 28% following Trump’s “Liberation Day,” when the president announced [sweeping tariffs on almost all countries](https://qz.com/donald-trump-reciprocal-tariffs-stock-market-trade-war-1851774110). What the U.S. and China are saying ---------------------------------- Speaking at the White House on Monday morning, [Trump characterized the development](https://qz.com/trump-us-china-trade-war-negotiations-deal-tariffs-1851780214?_gl=1*ic741k*_ga*NDg3NDc1NjAzLjE3MjY1OTIyNzQ.*_ga_V4QNJTT5L0*czE3NDcwNTQ2MzEkbzI0MSRnMSR0MTc0NzA2MjI1OCRqMzkkbDAkaDA.) as a “total reset with China” after months of mounting tariffs and trade tensions. “The best part of the deal,” he said, is that “China agreed to open itself up to American business.” Trump said the U.S. had long been open to Chinese goods while receiving little access in return. “It never made sense to me. It’s not fair,” he said. The president said he would be speaking with Chinese President Xi Jinping “maybe at the end of the week” as talks continue. Trump said the current relationship between the U.S. and China is “very good,” adding that “we’re not looking to hurt China.” He claimed that the trade war had taken a toll on the Chinese economy. Treasury Secretary Scott Bessent said the agreement signals a shared interest in avoiding full-scale economic decoupling. “The consensus from both delegations this weekend is neither side wants a decoupling,” he told reporters. “And what had occurred with these very high tariff... was an embargo, the equivalent of an embargo. And neither side wants that. We do want trade. ... We want more balanced trade, and I think that both sides are committed to achieving that.” Bessent added that the U.S. would continue to pursue “strategic rebalancing” in sensitive sectors such as pharmaceuticals, semiconductors, and steel. Bessent also said he was impressed by how seriously the Chinese took conversations around the fentanyl crisis in the U.S. “For the first time the Chinese side understood the magnitude of what is happening in the U.S.,” he said. Chinese Vice Premier He Lifeng echoed Bessent’s message of progress, calling the talks “candid and constructive” and pointing to progress toward a joint framework for further cooperation. A [joint statement](https://www.whitehouse.gov/briefings-statements/2025/05/joint-statement-on-u-s-china-economic-and-trade-meeting-in-geneva/) from the two countries Monday said both sides would “continue to advance related work in a spirit of mutual openness, continuous communication, cooperation and mutual respect.” The delegations, flanked by a heavy Swiss police presence, held more than a dozen hours of talks across both Saturday and Sunday at the official residence of Switzerland’s ambassador to the United Nations in Geneva. How did stocks and analysts react? ---------------------------------- The deal was met with immediate enthusiasm on Wall Street, with [U.S. stocks soaring](https://qz.com/nasdaq-dow-djia-sp500-stocks-us-china-trade-war-deal-1851780161) Monday morning. The Dow Jones Industrial Average was up 2.4% shortly after markets opened. The S&P 500 rose 2.6%, and the Nasdaq soared 3.6% as [tech stocks led the market relief rally](https://qz.com/aapl-goog-nvda-tsla-nasdaq-tech-stocks-trade-war-deal-1851780167?_gl=1*16sv2nx*_ga*MTYxODMyMzg4Mi4xNzQ0NjYwNDM5*_ga_V4QNJTT5L0*czE3NDcwNTU0NTMkbzExOSRnMSR0MTc0NzA1ODExMCRqNjAkbDAkaDA.). In a note released early Monday, analysts at Wedbush called the agreement a “dream scenario” for stocks, [especially tech](https://qz.com/aapl-goog-nvda-tsla-nasdaq-tech-stocks-trade-war-deal-1851780167). While “supply chain and economic damage has been done,” they wrote, Wall Street is likely to “focus on normalized growth post this volatile six-week period,” with a near-term recession likely “off the table.” They added: “This is very bullish news for the tech trade… although there is more wood to chop around chip restrictions (H20/Nvidia) and other issues in the AI trade.” Analysts at the firm now expect the focus to shift from the economic doom-and-gloom of the past six weeks toward a more normalized growth outlook. Other analysts [questioned](https://x.com/SpencerHakimian/status/1921647738078327053) the point of all the upheaval. Beyond financial markets, analysts expressed cautious optimism. Paul Diggle, chief economist at investment group Aberdeen, [told The Guardian](https://www.theguardian.com/business/live/2025/may/12/us-china-trade-war-talks-stock-markets-oil-dollar-gold-business-live-news?utm_source=chatgpt.com) that the deal “probably reduces some of the recession risks,” though he warned that “an underlying slowdown” is probably getting underway in the U.S. economy, with other economies also weakened by the trade war. Still, big questions persist. “It just seems like it’s a different story every day,” a former Morgan Stanley ([MS](https://qz.com/quote/MS)) analyst told Quartz. “I don’t know how business leaders can really make any plans when policy changes so much from week to week or even day to day. “Hopefully the tariffs stay off. The market reaction shows how important that is.” [Speaking to The Wall Street Journal](https://www.wsj.com/livecoverage/stock-market-today-tariffs-trade-war-05-12-2025/card/the-tariff-climbdown-six-takeaways-from-economists-and-analysts-P51wmOatEo8B33IMBlIO), ING’s ([ING](https://qz.com/quote/ING)) Inga Fechner warned that the 90-day pause might be short-lived and could actually widen the trade deficit. Mark Williams at Capital Economics similarly noted that China hasn’t offered meaningful concessions. “It will be interesting to see whether China is willing to offer anything substantive in these talks, but I can’t see that they’ll feel under a huge amount of pressure to do so,” he told [The Journal](https://www.wsj.com/livecoverage/stock-market-today-tariffs-trade-war-05-12-2025/card/the-tariff-climbdown-six-takeaways-from-economists-and-analysts-P51wmOatEo8B33IMBlIO?mod=WSJ_home_supertoppermiddle_lctimeline). “China has successfully called Trump’s bluff.” What comes next? ---------------- While the truce is temporary, both sides have signaled a willingness to continue talks. Bessent [told CNBC](https://www.cnbc.com/2025/05/12/treasury-secretary-bessent-says-hes-likely-to-meet-with-china-again-in-next-few-weeks.html) he is “likely to meet with China again in the next few weeks” to continue negotiations toward a more permanent agreement. Those discussions will likely address tariffs and issues such as intellectual property, market access, and China’s industrial subsidies — points of long-standing contention. A spokesperson for China’s ministry of commerce said, “This move meets the expectations of producers and consumers in both countries, as well as the interests of both nations and the common interest of the world. “We hope that the U.S. side will, based on this meeting, continue to move forward in the same direction with China, completely correct the erroneous practice of unilateral tariff hikes, and continually strengthen mutually beneficial cooperation,” the spokesperson added. While the Trump administration has emphasized “strategic rebalancing” in key industries, critics say the scope and speed of the tariff cuts suggest a recognition that the economic fallout from the trade war — particularly for U.S. manufacturers and consumers — had become too steep to sustain. That criticism reflects a broader tension in the interpretation of the deal: Is it the beginning of a constructive new chapter, or is it a tactical retreat under mounting domestic and global pressure? As for the broader trajectory of U.S. policy, signs point to a less combative tone — at least for now. —_Catherine Baab contributed to this article_.

High-level delegations from the United States and China are meeting in London to try and shore up a fragile truce in a trade dispute that has roiled the global economy LONDON -- High-level delegations from the United States and China are meeting in London on Monday to try and shore up a fragile truce in [a trade dispute](https://apnews.com/article/us-china-tariff-trump-xi-trade-london-talks-7db44c1697a7c4cf781e0e1796470625) that has roiled the global economy, A Chinese delegation led by Vice Premier He Lifeng is due to meet U.S. Commerce Secretary Howard Lutnick, Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer at an undisclosed location in the city. The talks are due to last at least a day. They follow negotiations in Geneva last month that brought a temporary respite in the trade war. The two countries announced May 12 they had agreed to a 90-day suspension of most of the 100%-plus tariffs they had imposed on each other in an escalating trade war that had sparked [fears of recession](https://apnews.com/article/trump-tariff-economy-recession-china-imports-trade-8d90bb37735e833c43a7b7a9d5a0b9a2). Since then, the U.S. and China have exchanged angry words over advanced semiconductors that power artificial intelligence, “rare earths” that are vital to carmakers and other industries, and [visas for Chinese students](https://apnews.com/article/chinese-exclusion-act-student-visas-us-80fb4551d4d1139b29f6cbc4d172603a) at American universities. President Donald Trump [spoke at length](https://apnews.com/article/trump-china-xi-tariffs-negotiations-trade-f2e4b48205001d7169ee34250089d8c1) with Chinese leader Xi Jinping by phone last Thursday in an attempt to put relations back on track. Trump announced on social media the next day that trade talks [would be held](https://apnews.com/article/donald-trump-china-xi-jinping-trade-81af927e3003610bbad7d84a154c6354) on Monday in London. The U.K. government says it is providing the venue and logistics but is not involved in the talks. “We are a nation that champions free trade and have always been clear that a trade war is in nobody’s interests, so we welcome these talks,” the British government said in a statement.

Photo: Brendan Smialowski (Getty Images) More than half of American CEOs believe some semblance of stability will finally return to the U.S. economy by July, once the tumult of tariff news settles down. According to the CEO Confidence Index [conducted](https://chiefexecutive.net/ceos-more-optimistic-about-economy-in-june-poll/) by the Chief Executive Group, which surveyed 277 corporate leaders in early June, optimism has been rising for the last three months — but slowly, and not exactly with great enthusiasm. The index rates confidence on a scale of 1 to 10: it’s currently at a not-very-inspiring 5.3, which is up from 5 in May and 4.5 in April, when the Trump administration launched its trade war. In January, just before Trump took office, the index was at 6.3. Consumer demand is the same or higher than last year, said the report, which supports a [report](https://qz.com/consumer-confidence-april-report-trump-tariff-trade-1851782477) from the Conference Board at the end of May. Rodon Group CEO Michael Araten thinks “business conditions are likely to improve as trade war calms down and interest rates are reduced.” In April, 62% of CEOs survived expected a recession sooner rather than later. That number is down to 28%. And yet inflation is expected to rise: 69% of CEOs expect their costs to trend upwards in the coming year. However, any sunshine is clouded with a caveat: that the Trump administration is able to establish some stability in the next three weeks, after flip-flopping on tariffs for the past three months. Trump [declared](https://qz.com/donald-trump-reciprocal-tariffs-stock-market-trade-war-1851774110) April 2 to be “Liberation Day” with a series of tariffs on every U.S. trading partner. One week [later](https://qz.com/bessent-tariff-pause-trumps-strategy-all-along-1851775517), he backed down, enacting a 90-day pause and claiming that his team could negotiate 90 trade deals in the next 90 days. As of June 9, they have one: with the [U.K.](https://qz.com/donald-trump-u-s-u-k-keir-starmer-trade-deal-tariffs-1851779699) No matter: Trump says every other country will just have to take their [lumps](https://qz.com/trump-tariffs-rates-trade-deals-u-s-china-bessent-1851781009), saying they’d be getting letters that will be “telling people what they will be paying to do business in the United States.” Meanwhile, the OECD [claims](https://qz.com/oecd-economic-growth-forecast-us-trump-tariffs-trade-1851783436) that America itself will be the biggest loser in the trade war it started.

U.S. trade negotiations with China entered their second day on Tuesday, as U.S. officials expressed optimism on the direction of the talks aimed at ending a trade war between the two biggest global economies. Commerce Secretary Howard Lutnick [spoke to reporters](https://x.com/EdwardLawrence/status/1932371818926703081) outside London’s Lancaster House, the site of high-stakes negotiations with Beijing. The American negotiating team is spearheaded by Lutnick, Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer. “We’ve been \[talking\] all day yesterday and we expect to go all day today. The talks are going well, we’re spending lots of time together,” he said. Trade tensions between the U.S. and Beijing spiked in recent weeks. Both countries have [accused each other](https://qz.com/trump-china-trade-agreement-violation-tariffs-1851783111?_gl=1*1z9ytm*_ga*MTYxODMyMzg4Mi4xNzQ0NjYwNDM5*_ga_V4QNJTT5L0*czE3NDkxMjg5NzEkbzIyMyRnMSR0MTc0OTEyOTgyNSRqMzYkbDAkaDA.) of reneging on [an interim accord](https://qz.com/us-china-trade-war-deal-tariffs-stocks-markets-1851780188) struck last month in Geneva that scaled back triple-digit tariffs in the ongoing trade war. However, Trump and other administration officials were hopeful about defusing tensions and securing a deal. “China’s not easy,” Trump said Monday after the first day of talks concluded. He added: “I’m only getting good reports.” “The purpose of the meeting today is to make sure that they’re serious, and to get handshakes from our three lead trade negotiators and get this thing behind us,” White House National Economic Council Director Kevin Hassett [told CNBC](https://www.cnbc.com/video/2025/06/09/watch-cnbcs-full-interview-with-national-economic-council-director-kevin-hassett.html?__source=sharebar%7Ctwitter&par=sharebar) on Monday. Trade tensions have crippled supply chains at critical points in the U.S. and China. American companies are reeling from Chinese export restrictions on rare earth magnets that are key components in autos, as well as energy and the defense sectors. China is grappling with a U.S. pause in shipments of chemicals and semiconductor chips, among other key components.