NEW DELHI: Global trade may be breathing a sigh of relief – but the world is also wondering: is this latest US-China tariff rollback a meaningful de-escalation, or just another temporary gimmick in a long-running trade war?
In a joint statement issued from Geneva, Washington and Beijing announced a partial thaw in their tariff standoff, agreeing to slash reciprocal duties dramatically.
By May 14, the US-China tariff issue is set to see a breakthrough with both sides having agreed to bring about substantial cut in duties. US has agreed to cut its combined 145 per cent levies on most Chinese imports to 30 per cent, including tariffs linked to fentanyl-related trade. China, in turn, will lower its 125 percent duties on US goods to 10 per cent.
The announcement comes with caveats. The tariff relief is temporary – offering a three-month window for both sides to work towards a broader agreement. While officials described the discussions as “robust and productive,” there was little clarity on whether structural issues like trade imbalances or industrial subsidies are any closer to resolution.
“We are in agreement that neither side wants to decouple,” said US Treasury Secretary Scott Bessent, following the Geneva talks. Yet, similar overtures in the past have unravelled.
The “Phase One” deal of January 2020 failed to deliver on its promises, with China falling short of its agreed purchases and the US trade deficit with China widening further during the pandemic years.
This time too, skepticism lingers. While the White House touted the agreement as a “trade deal,” it remains unclear how it will address the deeper grievances that triggered the tariff war.
China has consistently demanded a full rollback of all US-imposed tariffs – something Washington has resisted in its push to shrink the bilateral trade gap.
Markets welcome move
Even so, markets welcomed the announcement, and Chinese stocks regained some lost ground after the news broke. The agreement to establish a formal mechanism for continued dialogue could help keep trade routes stable in the short term – especially vital at a time when global supply chains are still recalibrating after pandemic disruptions and geopolitical tensions.
But observers caution against reading too much into the ceasefire. In 2018, both countries paused tariff actions after talks, only for hostilities to resume months later. Without clear benchmarks or enforcement mechanisms, this new deal could suffer a similar fate.
Trade Representative Jamieson Greer stressed that the US seeks a “more balanced” trade relationship with China. Yet what balance means in practical terms – whether in volumes, intellectual property protections, or access to markets – remains to be seen.
For now, global traders may enjoy the reprieve. But until Washington and Beijing commit to deeper structural reforms, the threat of renewed escalation looms large.
