{"id":47215,"date":"2025-05-16T06:50:33","date_gmt":"2025-05-15T22:50:33","guid":{"rendered":"https:\/\/chinaworker.info\/?p=47215"},"modified":"2025-07-14T20:19:35","modified_gmt":"2025-07-14T12:19:35","slug":"trumps-trade-war-us-and-china-agree-ceasefire","status":"publish","type":"post","link":"https:\/\/chinaworker.info\/en\/2025\/05\/16\/47215\/","title":{"rendered":"Trump\u2019s trade war: US and China agree ceasefire"},"content":{"rendered":"

\u2018Liberation Day\u2019 nightmare is scaled back for 90 days but what comes next?<\/strong><\/p>\n

Editorial from Socialist magazine, published by ISA in China, Hong Kong and Taiwan<\/p>\n

China and the US have de-escalated their trade war at least for the short term. Talks between the two sides on 10\u201311 May in Geneva produced a 90-day pause until 10 August from astronomical triple-digit tariffs. Both sides agreed to a 115-percentage point reduction in tariff levels. They also set up a \u201cconsultation mechanism\u201d, a fancy term for more talks.<\/p>\n

Contrary to Trump\u2019s exaggerated statements, this is not a trade deal, let alone a \u201ctotal reset with China\u201d as he claimed in a social media post. Rather, the Geneva agreement showed the extreme pressure on both sides, which forced them to seek a truce. The two regimes have stepped back from a full-scale economic showdown that went too far and escalated too fast. But neither regime seeks a return to the previous status quo or believes this to be possible.<\/p>\n

The imperialist power interests of both sides including their long-term military ambitions force them to drastically cut back their economic interdependence, to pursue further decoupling, a process that will accelerate regardless of last weekend\u2019s truce. But it shows that neither the US or China are currently ready or strong enough to withstand a de facto trade embargo, which is what materialised as Trump\u2019s regime recklessly raised tariffs to historic levels in an attempt to show strength. The de-escalation in Geneva leaves none of the underlying issues resolved.<\/p>\n

Given the blowback, especially in financial markets, it is unlikely the US will revert to triple-digit tariffs after the 90-day pause expires, although a smaller yet still substantial tariff increase is one possibility. Whatever form it takes, increased economic warfare is implicit in the situation and the prospects of a permanent US-China deal are close to non-existent. This is a power struggle between the world\u2019s current hegemon US imperialism and its main challenger Chinese imperialism; it is not fundamentally about trade deficits (whatever Trump may believe).<\/p>\n

Trade war is not over<\/strong><\/p>\n

The agreement leaves the latest (i.e. Trump 2.0) US tariffs against China at 30 percent and China\u2019s retaliatory tariffs against the US at 10 percent. Although the US has been forced to step back more than once in the past month, the massive trade war launched by Trump on \u2018Liberation Day\u2019 2 April is far from over. US tariffs are still higher than at any time in the past 100 years. Factoring in previous tariffs from the Biden and Trump 1.0 era, China now faces average tariffs of around 40 percent, according to Capital Economics, while the average US tariff for most countries is between 8 percent and 14 percent.<\/p>\n

Therefore, while stock markets predictably soared on the news of the US-China de-escalation, it provides only a temporary respite. New flare ups are possible on several fronts. And permanent damage has already been done, not least to the US itself, as a result of Trump\u2019s trade policies. These have further destabilized an already dangerously unstable capitalist world system.<\/p>\n

The US economy, which contracted -0.3 percent in Q1 of this year, is on the edge of recession. US inflation (which Trump boasted he would eliminate) is predicted by BNP Paribas to trend back towards 4 percent next year. This is a bleak economic scenario even without further Trump-induced or other shocks. Negative growth with inflation is known as stagflation.<\/p>\n

Chaos, setbacks and fake trade deals<\/strong><\/p>\n

The Geneva agreement is the latest and by far the most significant climbdown in a string of climb downs by Trump over the past few weeks. On 9 April, barely hours after they officially started, Trump was forced to pause all so-called reciprocal tariffs against some 90 countries with the exception of China. The retreat was a panic measure because US financial markets had begun to go into meltdown. A few days later, Trump also diluted his 145% China tariffs, announcing exemptions on around one-fifth of Chinese imports, including smartphones and laptops, for which China stands for half and 70 percent of global exports respectively.<\/p>\n

Trump has repeatedly made claims that new trade deals with dozens of countries are imminent, but this is more exaggeration. The only deal announced to date is with the UK\u2019s Starmer government, and this is a provisional document that explicitly states it is \u201cnon-binding\u201d. Trade agreements between states normally take months to negotiate, even years in some cases. Trump\u2019s government is clearly in a hurry to create positive headlines at the expense of substance. The agreement reached with China in Geneva contains even less, it merely suspends the extreme tariffs which Trump himself created.<\/p>\n

To describe Trump\u2019s trade tactics as messy, unplanned and contradictory would be a huge understatement. Of course, he is claiming the US-China tariff pause as a \u201cwin\u201d. But in reality, it is Trump who has been forced to retreat. He barreled headlong into a full-blown trade embargo against the \u201cworld\u2019s factory\u201d (China accounts for 29 percent of world manufacturing) with little real understanding of how it would impact the US economy. This was summed up by his remark that children in the US would be fine with, \u201ctwo dolls instead of 30 dolls.\u201d From a billionaire this is a statement with overtones of Marie Antoinette.<\/p>\n

The Trump administration\u2019s tariff-taliban approach led it to believe that having the biggest trade deficits gave it superpowers to subdue its economic rivals. Trump even believes trade policies can solve actual wars \u2014 whether over Taiwan (last year he threatened China with 150% tariffs if it invaded Taiwan, which has not aged well) or Kashmir (he claims his tariff policies were the key to the recent India-Pakistan ceasefire). These quack theories are being disproved before the eyes of the world, but that doesn\u2019t mean Trump & Co have learned anything or will change course.<\/p>\n

Who blinked first?<\/strong><\/p>\n

The question of which side \u201cwon\u201d the US-China tariff standoff is being hotly debated in the world\u2019s media. This question has a certain significance in terms of what happens next, who takes away an advantage from the Geneva talks, but that factor should not be blown out of proportion.<\/p>\n

In reality, both the US and Chinese regimes were shown to be more desperate for a de-escalation than their propaganda showed. Both claimed the Geneva talks were proposed by the other side, to avoid being seen as weak. Both wished to project strength and confidence. But China was already experiencing large scale factory shutdowns in export-dependent provinces like Guangdong and the threat of millions of job losses, and the US was facing recession \u2014 a danger that has not abated \u2014 and \u201cempty shelves\u201d reminiscent of the last days of the Soviet Union.<\/p>\n

The scale of disruption already caused is shown by the fact that on Friday 9 May, on the eve of the Geneva talks, not a single cargo ship left China for the US West Coast, something not seen since the pandemic. Now, following the tariff cuts, freight costs are set to rise dramatically as all available container ships are being booked to restart trans-Pacific shipments.<\/p>\n

Certainly, in terms of the immediate optics, the Chinese regime will feel satisfied with this outcome. Hu Xijin, a right-wing nationalist and pro-CCP (the so-called Communist Party) commentator, called it \u201ca great victory for China.\u201d But official CCP statements have been notably more low-key. It is under huge pressure from a dire economic situation, with worsening deflation, \u2018Japanification\u2019 (prolonged slow growth or stagnation), and an unemployment timebomb among the young.<\/p>\n

China made no new concessions at the talks (as far as we know) in return for the lowering of Trump\u2019s 145% tariffs, other than reducing its own tariffs by an equal amount. It now faces a tariff of 10% in common with every other country (plus the 20% so-called fentanyl tariff) despite being the only country that dared to retaliate against the US. \u201cAmerica has given China a strangely good tariff deal,\u201d declared The Economist. But Beijing will also have no illusions that this dip in the conflict is only temporary and that bigger trouble lies ahead.<\/p>\n

\u201cThis is 100% a retreat by the US, not a Chinese cave,\u201d Scott Kennedy of the Center for Strategic and International Studies told Reuters. \u201cThe US was the one that launched the trade war and escalated it. The Chinese retaliated and they\u2019ve only withdrawn their retaliatory measures,\u201d he commented.<\/p>\n

Alicia Garc\u00eda-Herrero, chief Asia-Pacific economist at French investment bank Natixis, gave a similar verdict: \u201cThe US blinked first. It thought it could raise tariffs almost infinitely without being hurt, but that hasn\u2019t been proven right.\u201d<\/p>\n

Demands on China?<\/strong><\/p>\n

The capitalists worldwide will breathe a sigh of relief over this agreement, which kicks a very big can down the road, but only for 90 days. Noticeably absent from the White House propaganda surrounding this agreement are any specific demands on Beijing. These would be the so-called non-tariff barriers, which we already know about from the first Trump-China trade war of 2018\u201320. These amount to the dismantling of China\u2019s state capitalist economic model: eliminating subsidies, the dominance of state-owned companies, capital and currency controls, and the CCP\u2019s control of the banks.<\/p>\n

Trump alluded to this when he claimed that during the Geneva talks China \u201cagreed to open up\u201d, adding that \u201cWe have to get it papered, but they\u2019ve agreed to open up China.\u201d We can say with certainty that this was not \u201cagreed\u201d, and there is zero chance of this happening. The CCP regime is never going to make such far-reaching concessions to the US because these would imperil the very foundation of its dictatorship. To rule China, the CCP requires a high degree of economic and political control.<\/p>\n

During Trump\u2019s first term, the Chinese regime used its traditional delaying tactics and the art of being vague to let the clock tick towards the next US election, increasing Trump\u2019s desperation for some kind \u2014 any kind \u2014 of deal. Trump settled for China\u2019s offer to spend $200 billion on increased imports from the US over two years, mostly farm goods and energy, in what became known as the \u2018phase one trade deal\u2019. China\u2019s purchases never came close to $200 billion \u2014 the deal was only 58% fulfilled according to the Peterson Institute for International Economics. Trump blames this failure on Joe Biden and the pandemic. Going from here, something based on the \u2018phase one\u2019 deal may be what Trump officials now want to pursue. (see chinaworker.info\u2019s article from 2020 on the phase one trade deal<\/a>)<\/p>\n

The capitalist system is living on borrowed time, with Trump\u2019s chaotic and reactionary policies just the most recent symptoms of a deeper sickness. Workers cannot look for solutions in capitalist free trade or capitalist protectionism, which are two sides of the same coin. Our answer has to be organised mass struggle to overthrow capitalism and replace it with working class control and planning of the economy and international socialism.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u2018Liberation Day\u2019 nightmare is scaled back for 90 days but what comes next? Editorial from Socialist magazine, published by ISA in China, Hong Kong and Taiwan China and the US have de-escalated their trade war at least for the short term. Talks between the two sides on 10\u201311 May in Geneva produced a 90-day pause […]<\/p>\n","protected":false},"author":10,"featured_media":47210,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"tdm_status":"","tdm_grid_status":"","footnotes":""},"categories":[148,124],"tags":[216,7382,12294],"class_list":{"0":"post-47215","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-international","8":"category-news","9":"tag-imperialism","10":"tag-trump","11":"tag-us-china-conflict"},"yoast_head":"\nTrump\u2019s trade war: US and China agree ceasefire - China Worker<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/chinaworker.info\/en\/2025\/05\/16\/47215\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Trump\u2019s trade war: US and China agree ceasefire - China Worker\" \/>\n<meta property=\"og:description\" content=\"\u2018Liberation Day\u2019 nightmare is scaled back for 90 days but what comes next? 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Editorial from Socialist magazine, published by ISA in China, Hong Kong and Taiwan China and the US have de-escalated their trade war at least for the short term. 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