If you have blinked, you may have missed the president who built his economic agenda on the prices by quietly turning the page on the American -Chinese trade war – for the moment – with barely a whisper of the fire and the fury he launched it with barely more than a month ago. No fanfare. No victory parade.
After deadly tariff hikes, socialization of bellicose truth and a supposed “big decoupling” of American and Chinese economies, the first phase of the trade war between the two countries ended on Monday and not with a blow. Instead, he collapsed with a somewhat calm backpedal of the White House.
The Trump administration has announced A radical de -escalation of 90 days of the trade warBoth parties agree to reduce prices and another series of negotiations. The announcement was full of vague promise of recovery – and no clear victory for American structural requests.
If it was a poker game, China may have just called President Donald Trump's bluff.
Before trade negotiations in Geneva this weekend, Trump had floated reduction prices on China 80% – down the rise in eyebrows, 145% which he had imposed a few weeks earlier. But he also declared on social networks that he would leave the details to “Scott B”, the secretary of the Treasury Scott Bessent. It turns out that Bessent had other ideas. Thedeal chopped in Geneva landed at a 30% levy on Chinese imports – a padded number by a 20% price linked to fentanyl already on books.
This is not exactly what Trump had broadcast.
A rewritten trade agreement in real time
For a president who said once “trade wars are good and easy to win”, optics are difficult to ignore: China is breathing, Wall Street obtains its market rallyAnd Trump is lucky to change the subject.
“The most important thing for me is the opening”, ” Trump told journalists A few hours after the announcement of the trade agreement, swivel of its previous accent on the prices. “I think it would be fantastic for our companies if we could enter and compete.”
It is far from Trump's recent rhetoric claiming that prices on China could raise billions of billions for the United States government.
Susan Shirk, a longtime expert in China and former deputy assistant secretary of state of the East Asia office and Pacific affairs, said that the commercial confrontation was “a crisis created by the taxation of Trump prices” and described the administration's strategy as “ridiculous”. Bessent, she noted, had only recently called allies to reduce trade with China-a decision that quickly unified the international opposition against Washington.
“The Trump administration declares victory. Very well. Who cares?” said Shirk, now a professor at the University of California in San Diego. She added that the extent of the pricing discounts even surprised observers close to talks.
Arthur T. Dong, professor at the McDonough School of Business in Georgetown, described the trade agreement as a monumental, saying that the two parties knew that they had too much to lose.
“I would use a kind of military analogy: mutually guaranteed economic destruction,” said Dong. “We played with a nuclear economic war with a sense – you do not do nuclear war because you will destroy each other.”
Dong said he would not be surprised if there was a summit between Trump and his Chinese counterpart, Xi Jingping, in the non -distant future.
“The two parties will claim victory,” he added, “but I would say that, on the whole, the world economy is the winner.”
A victory, an oscillation or a reset?
The market verdict? Relief.
Mark Williams of Capital Economics said to the Wall Street Journal It is important to note that China has not offered significant concessions. “It will be interesting to see if China is ready to offer something substantial in these discussions, but I do not see that they will feel under enormous pressure to do so,” he said. “China has managed to call Trump's bluff.”
And in a research note, Jeffries analysts (Jef) called the agreement “a sign that the United States is more desperate than China to transmit the message of” de-escalation “to the market.”
“Trump would accept little to defeat in his Maga plan motivated by prices,” said Jeffries' analysts, “but his tactics to” increase the price and then given “to conclude a final agreement seems to be a good deal for the market and the other side.”
China, for its part, painted the result as a clear victory for its domestic audience. “The firm countermeasures and the resolved positions of China have been very effective,” said one social networks Account linked to Chinese video surveillance state television.
Analysts warned that this “agreement” is something other than a temporary cease-fire. The price of 30% on China remains punishing compared to historical standards. A study published Monday of the LAB budget at the University of Yale revealed that, even with the truce in China on Monday and Last week's trade agreement with the United Kingdomthe average average American rate on imports is The highest, since 1934. The exemptions from tariffs on China for technology and consumer electronics are closely adapted and limited in time.
And current negotiations are still focused on “reciprocal” prices, while sectoral tasks could be back on the table by July.
Trump, for his part, will surely not call this retirement affair. Its model – the hike first, the delivery later – allows it to frame even a modest concession as Masterstroke.
“If the United States and China finally settled around a tariff level of 40 to 45% for a two-year-old truce, the markets will probably delight him,” said Jeffries, “because it seems moderate compared to the chaos that preceded.” This framing – from 145% to 30% – means that this week's result looks like a breakthrough. But companies, and Beijing, know better than assuming that the storm has passed.
Jamie Cox, director of Harris Financial Group, said that the 90 -day break left everything on the table.
“If the United States can ensure that the Chinese undertake to rebalance the significant trade within 90 days, it would be historic,” said Cox in a note. “However, the Chinese are fairly able to block, so there is still a very steep hill to climb to obtain a real agreement.”
Cox said in an interview that “the Joker was always going to be Trump” and that there is no real game book with the president's negotiations.
“The markets have somehow understood that the ramp out of the ramp would be built, that whatever happens, Trump went to Zig and Zag – whatever he had to do so as not to injure him,” said Cox.
The president, however inadvertently, may have found a way to go on the prices to repress fears and claim negotiated victories.
“Now that China is at the table … The last thing you want to be is the last online,” said Cox. “These 18 countries that have just been seated on the fence while waiting to see what China does – they have an answer.”
After weeks of hand whipping on the spectrum of flight protectionism, the emerging consensus of Wall Street is a cautious relief.
“The markets react extremely positively to the news that the Trump administration used prices as a tactics of negotiation after all, and we are not going to come back blindly to the Smoot-Hawley days,” said Chris Zaccarelli, director of investments for Northlight Asset Management.
Dan Ives, analyst at Wedbush Securities, described the agreement in a note from Monday morning as a “dream scenario” and a “huge victory for the market and the bulls”.
A ceasefire, not a permanent trade agreement
However, the wider geopolitical image remains troubled.
Peter Dutton, a principal researcher at the Paul Tsai China Center of the Yale Law School, said that it was not the end of the debate on decoupling – just a recognition that the detangling of two giant economies will be much more difficult than political slogans suggest.
“The United States and China are interested in a stable arrangement,” said Dutton. “This is only the beginning of a process of stabilization of the economic components of the relationship, and it will probably be a long and constant process.”
Dong, professor of Georgetown, offered an appropriate metaphor: “There is an ancient Chinese saying: the tree that folds is the one that survives.”
Trump looked. But maybe China was standing.
In the end, the ambiguity of the agreement allows the two parties to declare victory. But it does not solve any of the more thorny problems – technology transfer, state subsidies, data governance. Beijing moves away by appearing measured. Washington moves away recalibrated.
And with a 90 -day clock now, the real test is still in advance.
The discussions will resume. Prices can also resume. But the biggest challenge can take the form of credibility. After so many threats, so much volatility, and so little to show for this, allies and adversaries can start to wonder how seriously the threats of the White House.
“American credibility has been seriously damaged,” said Shirk, former deputy assistant assistant secretary. “This agreement will not repair this. It will take much more to – otherwise never – restore this.”
The trade war started with Trump promising an economic conquest.
Now there is a ceasefire that looks very much like a carefully staged retirement.
And if you click your eyes, you could miss what comes next.
