By Lale Akoner
May 21, 2025
The US-China tariff truce is a tactical pause, not a final deal but for markets, but it’s a meaningful de-escalation. While the structural issues remain unresolved, the signal is clear: neither side wants to push trade tensions further. Slashing duties from 145% to 30% (US) and 125% to 10% (China) marks a dramatic de-escalation, likely aimed at calming markets and averting further economic drag.
Still, follow-through matters more than headlines. The deal is still short on detail, and it’s unclear what an “acceptable” outcome looks like for either side. China wants full rollback; the US is still chasing trade balance and enforcement tools. The 90-day cool-off echoes 2018’s ceasefire which ultimately collapsed into deeper conflict before “Phase One” was signed. Talks may result in “purchasing agreements,” but past experience (like the short-lived 2018 détente) shows how fragile these deals can be. With both sides keeping legacy tariffs in place and core disagreements unresolved, the road to a durable accord remains long. This time could be different, but without a clear framework or binding terms, the risk of déjà vu lingers.
Still, if this truce holds, it’s a real tailwind for global risk assets, especially exporters, cyclicals, and supply chain-sensitive sectors.
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