A new chapter in China-U.S. trade

Editor's note: Xu Ying is a special commentator on international affairs for CGTN, based in Beijing. The article reflects the author's opinions and not necessarily the views of CGTN.

In May, the world witnessed a consequential turning point in international economic relations. China and the U.S., long embroiled in a bitter trade conflict, reached a landmark agreement to roll back tariffs and resume structured dialogue. While the headlines are striking – "U.S. tariffs on Chinese imports reduced from 145 percent to 30 percent," and "China's tariffs on American goods dropped from 125 percent to 10 percent" – the real story lies beneath the surface. This is a rare alignment of interests, born not out of trust but necessity, and it carries profound implications for global business, finance, and geopolitical equilibrium.

For years, the trade war between the world's two largest economies has distorted global supply chains, driven up input costs, and injected systemic uncertainty into cross-border commerce. Tariffs were once tactical weapons, but they've evolved into symbols of ideological intransigence. In this context, the agreement announced Monday in Geneva is not merely a commercial adjustment – it is a recalibration of global trade orthodoxy.

Reset toward rationality

Just after the first day of the China-U.S. trade talks in Geneva on Saturday, President Donald Trump publicly commented that the meeting was "very good." He believed that the talks would be "a total reset negotiated in a friendly, but constructive, manner."

For China, the calculus behind this agreement is principled and pragmatic. China's leadership has in recent years adopted a dual circulation strategy aimed at reducing dependence on external markets while strengthening domestic consumption. Yet, even within this framework, access to American technology, capital, and consumer markets remains critical to long-term growth and development.

The Chinese business community – particularly exporters, technology firms, and manufacturers – have welcomed the tariff relief. For many of them, American tariffs had become a structural impediment to innovation and expansion. With export-driven provinces like Guangdong and Zhejiang experiencing downward pressure, this deal is seen as a bridge to revive foreign demand.

America's strategic recalibration

For the U.S., the Trump administration has finally recognized the limits of sustained economic decoupling. While tariffs generated temporary leverage, they will fail to meaningfully shift the U.S. trade deficit or reshore industrial capacity at scale. The agreement reflects a pivot from "punishment" to pragmatism – a move aimed at stabilizing markets, cooling inflation, and creating space for more sophisticated economic competition.

Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer have emphasized the importance of institutionalizing economic dialogue. The newly established trade consultation mechanism – set to alternate between China, the U.S. or an agreed third country – offers a structured format for resolving disputes before they escalate. There is no illusion in Washington that China will liberalize in ways favorable to U.S. interests, but there is a growing understanding that engagement, not confrontation, better serves America's long-term economic and strategic goals.

Global markets: Relief and realignment

Markets around the world have been reacting with cautious optimism. Equities in Asia surged following the announcement, and indices in Europe and the U.S. are reflecting relief that global economic fragmentation may be slowing. Commodities markets – particularly those linked to manufacturing like copper and steel – are also showing upward momentum. The message is clear: predictability – even without full reconciliation – is valuable capital.

Yet, this moment also forces global firms to rethink strategy. Businesses that had spent the last five years diversifying away from China – such as investing in Southeast Asia, India, and Latin America – must now balance those moves against the re-opening of the Chinese-American commercial corridor. For multinationals, optionality remains the name of the game.

For financial institutions, this detente opens a new cycle of opportunity. Investment flows, previously restricted by uncertainty, can resume in sectors previously chilled by geopolitical risk: clean energy collaboration, AI governance frameworks, and even green finance. In the medium term, we may even see a rebound in cross-border IPOs, venture capital activity, and trade finance volumes.

A Model for the future?

What this agreement ultimately signals is not the end of competition, but the beginning of a more disciplined, rules-based approach to it. Both nations remain entangled in technology, security, and influence. But that need not preclude cooperation. If this framework holds, it may serve as a model for a "managed relationship" – a balance of ambition and restraint that preserves space for negotiation.

From an analytical standpoint, this deal affirms a timeless truth: even the fiercest competitors must occasionally find common cause, particularly when the costs of discord grow unsustainable. The economic interdependence of the United States and China may ebb and flow, but it is far from severable. Attempts to "decouple" have proven costly and, in many cases, counterproductive. What is emerging now is not naïve globalization, but a new form of conditional integration.

As analysts, executives, and policymakers, we must approach this moment with both discernment and vision. The deal's immediate benefits – tariff relief, market stability, renewed dialogue – are significant. But the greater opportunity lies in shaping what follows: sustained engagement, deeper cooperation in areas of mutual benefit, and a durable framework for conflict resolution.

China and the United States will remain distinct in ideology, governance, and strategic visions. But if this agreement can serve as a platform for responsible competition and economic resilience, then it will mark not just a temporary reprieve, but the start of a new chapter in global trade. Let us meet this moment with the intellectual seriousness it demands. The world is watching – not for gestures, but for sustained leadership.

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