US and China hold a trade truce for 90 days. Both sides cut steep import duties. The US cut its rate to 30 percent from 145 percent. China cut its rate to 10 percent from 125 percent. This move eased some pressure on factory costs around the world. It also gave both sides room to talk and plan next steps
Trade talks and tariff pause
The two sides met in Geneva on May 12, 2025. They agreed to stop new tariffs for three months. They also set up a new dialogue forum. This forum will track progress and suggest fixes. Both sides said they want stable trade. They said they want rules that apply to all members at the World Trade Organization.
China said it will join in group efforts at the WTO. It also said it wants rule based trade. The US said it will push for reform at the WTO. It noted that the current system does not stop unfair state driven moves.
Tech and lab security rules
On May 22, the US Federal Communications Commission voted on new lab rules. It will bar Chinese labs seen as security risks from testing US electronics. Those include cameras and smartphones. The FCC said some labs could be tied to China’s state bodies or military. It warned of the risk that bad code or chips could end up in US networks.
The order names firms like Huawei and ZTE on a “covered list.” It may widen to all labs in China and in other rival states. It may ask groups to own up to all their US filings and licenses. It will probe nine Chinese firms for links to moves that break US limits.
Chip controls and China’s warning
The US is set to expand export curbs on advanced chips. It aims to stop sales of high end semiconductors to China. It also will limit gear that can make those chips. The goal is to slow China’s push to lead in AI and advanced tech. The move will hit China’s top chip foundries.
China said on May 21 that it will take legal steps against those who back US chip limits. It warned firms and people to watch out for rules it may use in return. It said it will protect its own chip work and tech push.
Impact on US economy and firms
The short tariff pause eased some fears of a US slowdown. It cut near term risks of a recession. Yet US debt woes still weigh on ratings. Moody’s cut the US score on May 16, 2025. That raises the cost to borrow abroad.
Komatsu, the Japanese maker of heavy gear, saw hopes for lower costs. Its boss said the pause may save $140 million in US tariffs in 2025. He said the rest of the year may look brighter for profit plans.
Military tensions and Taiwan
Investors fear no safe spot if China attacks Taiwan. They see any clash as a shock for global markets. They also fear it may halt trade routes through key sea lanes.
China has stepped up drills near Taiwan. It sent warplanes and ships close to the island. Taiwan flew jets to track them. The US sent two warships through the Taiwan Strait on May 20. Each side said it acts in line with law. Each side said it wants peace and calm.
Climate and green ties
And both sides see a need to work on climate change. They spoke at the recent G7 and the Belt and Road meetings. They said they will back green projects and share tech on clean energy. This may help cut global carbon emissions.
They also said they will join a net zero fund to help poor nations. They aim to raise $100 billion a year by 2026. They hope to boost solar and wind projects in Africa and Asia
Diplomatic visits and talks
Top US and Chinese envoys met in Beijing on May 14. They discussed next steps on trade and tech. They also talked on human rights and climate. Both said talks were frank. Each side said it will report back to its leader.
US Secretary of State will visit China in June. He will set out US priorities. He will push to keep lines of contact open on military and safety at sea.
What comes next
And now both sides will watch the 90 day pause. They will weigh the benefits of calm trade. They will also track tech and military risks. Each side will judge if they can cut more tariffs. Each side will watch new rules on chips and labs. Each side will push to keep talks alive.
In short the truce may show new steps to calm a long tie. It may build trust for more moves. It may also flare old fears if one side breaks a promise. For now both sides say they want stable ties. They say they will talk and seek fit for all sides.
