US-China talks resume as Trump hails 'total reset' in trade relations

The US and China have agreed to a 90-day truce in their trade war, reducing tariffs on each other's imports. The US will lower its tariff on Chinese goods from 145% to 30%, while China will reduce its levy on US imports from 125% to 10%. This move aims to de-escalate tensions and foster a more conducive environment for negotiations.
The agreement has sent positive shockwaves through financial markets, with the Chinese yuan surging to a six-month high and European stocks rising sharply. Germany's DAX index jumped nearly 1%, led by gains in Mercedes-Benz, Daimler Trucks, and BMW, while France's CAC 40 index rose by 1.3%. Shares in the Danish shipping group Maersk soared by 12%, and Brent crude oil rose almost 3% to $65.75 a barrel.
Experts are cautiously optimistic about the truce, but note that underlying structural issues remain a significant challenge. Critical issues like intellectual property rights, technology transfer policies, and market access barriers are still unresolved. "The agreement does not represent the resolution of the structural contradictions between China and the United States," warned Wang Wen, head of the Chongyang Institute for Financial Studies.
Businesses are advised to use this 90-day window to reassess their supply chains, negotiate better terms with suppliers, and explore alternative markets to mitigate future risks. Dr. Anya Sharma, a leading economist specializing in international trade and supply chain management, suggests that companies should be aggressively evaluating their supply chains and diversifying sourcing outside of China.
The truce may lead to a surge in imports as US companies take advantage of the lower tariffs. However, supply chain experts warn that the 90-day window may not be enough for producers or importers to adjust, given the uncertainty and constant back-and-forth swings in trade policies. Factories in China that have furloughed workers need to bring them back, and raw material orders that were canceled need to be reinstated, which will take time ¹ ².
Potential Outcomes:
Thorough Trade Agreement: A genuine agreement that addresses key concerns and establishes a framework for long-term economic cooperation.
Extension of the Truce: Both sides agree to extend the 90-day period to allow more time for negotiations, potentially with further concessions.
Return to Escalation: If no progress is made, the trade war could reignite, leading to renewed tariffs and economic disruption.
The American Apparel & Footwear Association welcomed the thaw in the trade war but emphasized that only a permanent deal will allow them to make trade and investment decisions. The residual 30% tariff will still make for an expensive back-to-school and holiday season for most Americans ².