Truce or No Truce? Looking at the US-China Trade Wars

The United States and China, two global superpowers intertwined in economic interdependence and political rivalry, have spent the last several years locked in a relentless trade war. While tariffs have been the visible battlefield, the conflict runs much deeper, encompassing technology, intellectual property, national security, and the future of global economic leadership.

In May 2025, a temporary 90-day truce in the latest round of tariffs marked a potential turning point. But rather than a resolution, it underscores how fragile and complex this economic standoff has become.

A Brief Timeline of Escalation

The roots of the trade war stretch back decades, with grievances over trade imbalances, alleged intellectual property theft, and market access inequalities simmering for years. Tensions peaked during former President Donald Trump's administration, when the U.S. began imposing sweeping tariffs on hundreds of billions of dollars worth of Chinese goods. China responded in kind, initiating a tit-for-tat escalation that strained businesses globally.

Fast-forward to 2024-2025, and a new wave of tariffs reignited the feud. In early April 2025, the U.S. levied a 145% tariff on most Chinese imports, citing national security concerns and "unfair competitive practices." China retaliated almost immediately, slapping a 125% tariff on American goods, including key exports like soybeans, semiconductors, and automobiles.

The 90-Day Truce: A Tactical Pause, Not a Peace Deal

On May 12, 2025, both countries agreed to de-escalate… for now.

• U.S. tariffs on Chinese goods dropped from 145% to 30% • China reduced tariffs on U.S. goods from 125% to 10% The 90-day window is meant to facilitate renewed dialogue. Both sides framed the decision as a pragmatic step to "create room for constructive negotiations." Behind the scenes, however, it is clear that economic pressures, both domestic and international, forced hands.

U.S. importers, retailers, and manufacturers had begun to feel the sting of rising costs, while Chinese exporters faced shrinking profit margins and logistical hurdles. Global markets, already anxious over supply chain fragility, responded positively to the pause, but volatility remains.

Sectoral Impact: Winners, Losers, and Uncertainty

Retail & Consumer Goods

American retailers such as Walmart and Target were among the first to raise alarms. Facing cost increases of up to 20% on consumer electronics, clothing, and toys, several companies passed the burden to consumers. Walmart has already implemented price hikes, citing tariff-related import costs. Yet surprisingly, consumer spending remains resilient, for now.

Manufacturing & Automotive

The automotive sector faces a nuanced challenge. While Detroit automakers like Ford welcomed the move as a step toward “fairer competition,” the supply chains they rely on remain heavily dependent on Chinese components. CEO Jim Farley praised the revised tariffs, suggesting they could stimulate U.S.-based production. However, analysts warn that short-term disruption is still likely, especially for electric vehicle (EV) makers dependent on rare earth materials.

Technology & Rare Earths

This trade war is also a tech war. At the heart of the issue is China’s near-monopoly on the refinement of rare earth elements, crucial for smartphones, electric vehicles, and military systems. Recent export controls imposed by Beijing on these materials have stoked fears in Washington and Silicon Valley. In response, the U.S. is investing in domestic rare earth supply chains, but experts agree that reversing China’s dominance in this area will take years.

Global Supply Chain Ripples

Container bookings from China to U.S. ports surged by nearly 300% following the truce announcement: a clear signal that companies are rushing to capitalize on the temporary reprieve. Yet the logistics industry remains wary. Warehousing shortages, port congestion, and inflationary shipping costs are just a few of the enduring problems that will not be resolved by tariff relief alone.

Moreover, international partners caught in the crossfire, particularly in Southeast Asia and Europe, are recalibrating their supply chain strategies to minimize exposure to further shocks. There’s a growing trend toward diversification and nearshoring, especially in critical industries like semiconductors and pharmaceuticals.

Analysis: A War Without Victory

The U.S.-China trade war is more than a dispute over economic numbers. It’s a reflection of broader ideological and strategic competition. The U.S. seeks to retain its economic leadership and protect intellectual property, while China aims to assert its rise as a global power capable of setting its own rules.

The 90-day tariff truce, while welcome, is not a long-term solution. It serves as a pressure release valve for domestic industries on both sides, but it does not address the root causes: structural economic differences, mutual distrust, and incompatible visions of global trade governance.

There is also the political dimension. With U.S. presidential elections approaching, trade policy will remain a hot-button issue. Any move perceived as “soft” on China could become a liability for candidates on both sides of the aisle. Similarly, China’s leadership is navigating internal economic slowdowns and demographic challenges, making concessions politically risky.

What Lies Ahead: Negotiation or Prolonged Deterrence?

Looking forward, three scenarios appear plausible:

Constructive Re-engagement: Both sides use the 90-day window to lay the groundwork for a new trade framework, possibly revisiting and modernizing WTO commitments. Unlikely, but not impossible.
Tariff Reinstatement: If talks falter, the return to punitive tariffs could be swift and harsher than before, deepening economic fragmentation.
Strategic Decoupling: A gradual, silent unwinding of trade interdependence, especially in sensitive sectors like technology and defense-related manufacturing. Most analysts favor the third scenario as the likely trajectory. While outright confrontation may be avoided, both nations are actively reorienting their economies toward resilience and reduced reliance on each other. The era of globalization built on seamless U.S.-China trade may be fading.

Conclusion: The Illusion of a Quick Fix

The current trade pause is not peace, it is a timeout. It gives businesses some breathing room and opens the door for diplomacy, but deep-seated issues remain unresolved. For companies, policymakers, and investors, the message is clear: prepare for volatility, diversify supply chains, and engage with the U.S.-China relationship not as a series of isolated disputes, but as a defining feature of the global economy for years to come.

In the end, the trade war is not simply about tariffs, it’s about trust, power, and the architecture of the 21st-century world order.

References

BBC News. “U.S.-China Tariff War: Truce Sparks Global Trade Surge.” May 2025. https://www.bbc.com/news/articles/cy8d9ygd4yqo

BBC News. “Retailers React to Trade War with Price Hikes.” May 2025. https://www.bbc.com/news/articles/clyg2939ej2o

Fortune. “The U.S.-China Trade War: A 90-Day Pause 70 Years in the Making.” May 2025. https://fortune.com/article/us-china-trade-war-90-day-pause-70-years-in-making/

CNN Business. “Timeline: U.S.-China Tariffs and the Trump Legacy.” April 2025. https://www.cnn.com/2025/04/12/business/us-china-tariffs-trump-timeline-dg