A Fragile Truce: The U.S.–China Trade Deal and the Tensions Beneath the Surface

The United States and China may have announced a breakthrough in their long-standing trade conflict, but make no mistake—this is no final peace. The recent deal, forged in Geneva, may have sent global markets rallying, but it represents more of a temporary ceasefire than a resolution. With a 90-day pause on sky-high tariffs, both economic superpowers have simply bought time. And if history—and President Donald Trump’s governing style—are any indication, this conflict may flare up again sooner rather than later.

After a weekend of tense negotiations guarded by Swiss police and held in a picturesque 18th-century villa, U.S. and Chinese officials emerged to declare a partial rollback of their self-imposed economic blockades. The U.S. agreed to reduce its towering 145% tariff on Chinese goods down to 30%. In return, China brought its tariffs on American products down to 10% from a staggering 125%. While this reduction marks a dramatic shift from the brinkmanship of just a few weeks ago, the new tariffs remain significantly higher than pre-conflict levels—and the structural issues that sparked the trade war in the first place remain unsolved.

Despite the positive headlines, this 90-day truce is fraught with uncertainty. Investors, manufacturers, and exporters may be breathing a sigh of relief, but they’re also left guessing whether this pause will morph into progress—or yet another round of tariff escalations. Trump’s aggressive use of tariffs as a policy weapon, a hallmark of his administration, continues to be a disruptive force in global economics. His ability to throw financial markets into a tailspin with a single tweet—or signature—has proven time and again that the global economy is far from immune to political volatility.

Trump’s tariff tactics have become a kind of economic brinkmanship, and it’s a weapon he seems reluctant to holster. The recent climbdown was not the result of newfound harmony but rather a recognition—on both sides—that continued escalation was beginning to exact real pain. Craig Singleton, a senior director at the Foundation for Defense of Democracies, aptly noted that both countries found themselves more economically boxed in than they were willing to admit. China’s economy was showing signs of distress: rising unemployment, a decline in export orders, and growing concerns over capital flight. For Trump, the threat of a market meltdown ahead of an election cycle was reason enough to recalibrate.

And so, we have a deal—but one without depth. U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent called the agreement “the equivalent of avoiding an embargo.” Yet the 30% tariff still includes punitive levies originally aimed at unrelated issues—such as pressuring China to crack down on fentanyl exports. What’s more, many earlier tariffs from Trump’s first term remain in place, some even upheld during the Biden administration.

From China’s perspective, the agreement is both a relief and a risk. The country’s leadership must walk a fine line: sustaining economic growth while avoiding unrest among a population growing increasingly sensitive to the impacts of slowed trade. A working-class population in China, heavily dependent on manufacturing exports, could become restive if Trump’s policies once again cut off access to global markets. A vulnerable, economically stressed populace is a threat not only to China’s economy, but to its internal political stability.

Despite the deal, fundamental divides remain: intellectual property theft, forced technology transfers, and industrial subsidies—issues the U.S. continues to see as core problems in China’s economic behavior. None of these were addressed meaningfully in the Geneva agreement. Instead, the focus was on damage control.

Dani Rodrik of Harvard University pulled no punches in his analysis, declaring that the U.S. had gained “absolutely nothing” from the ordeal in terms of policy concessions. “Zilch,” he posted bluntly, highlighting the disproportionate impact on American consumers and businesses.

Nonetheless, global markets reacted with enthusiasm. U.S. stock futures soared, oil prices jumped, and European and Asian indices followed suit. But this relief rally may be short-lived. As Eswar Prasad of Cornell University noted, “The drop from sky-high to merely high tariffs, along with the uncertainty about the path of future tariffs, will still serve as a constraint on trade and investment flows between the two economies.”

Companies like Basic Fun—a toy manufacturer whose products include Care Bears and Tonka trucks—are adjusting as best they can. CEO Jay Foreman welcomed the lower tariffs but warned that price hikes of 10% to 15% were still coming. “It’s like they tried to feed us a rotten egg sandwich and hope we’re happy to drink spoiled milk instead,” he said, summing up the sentiment of many American importers caught in the crossfire.

So where do we go from here? If recent history is a guide, the world should not rest easy. Trump views tariffs not just as policy tools, but as political instruments—leveraging economic disruption for negotiation power and public posturing. There is a strong possibility he will wield them again, especially if talks falter or if he seeks a fresh battleground in the ongoing contest with China.

In the end, this 90-day pause is a moment of calm in a storm far from over. It offers a chance for dialogue, yes—but also a stark reminder of just how quickly the levers of global power can be pulled to generate uncertainty, division, and disruption. And until a more permanent agreement is reached, the shadow of the trade war will continue to loom large over both Washington and Beijing—and the global economy watching nervously in between.