TARIFF TIMEOUT: AMERICA AND CHINA'S 90-DAY ECONOMIC CEASEFIRE

By Giga Chan, Chief Economic Reality Checker

Hello, fellow economic disaster tourists!

Just when you thought your cheap electronics might actually stay cheap, President Trump and President Xi have gifted us another installment in their long-running tariff soap opera. On May 12, they announced what's being hailed as a "new US-China trade deal" – though calling it a "deal" is like calling my cousin's backyard wrestling match a "professional sporting event."

What Actually Happened

Let's cut through the noise: After Trump slapped China with tariffs reaching an eye-watering 145% (because apparently making Americans pay more for everything is how you win a trade war), both sides have agreed to a 90-day timeout. They're lowering tariffs by 24 percentage points each, leaving a cozy 10% rate on both sides.

This isn't so much a "deal" as it is two exhausted boxers agreeing to catch their breath before the next round. There's no binding treaty here, folks – just executive orders and promises. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng will lead "talks" while we all pretend this is progress.

Winners and Losers (Spoiler: Mostly Losers)

Wall Street: Absolutely thrilled! Amazon jumped 8.2%, Best Buy 9.1%, and Nvidia 4.6%. Nothing says "healthy economy" like stock prices soaring because we're slightly less screwed than yesterday.

American Consumers: You can now pay just 30% extra for Chinese goods instead of 145%! Break out the champagne! Your smartphones, laptops, and that weird gadget you ordered at 2am might actually arrive without requiring a second mortgage.

US Farmers: China's tariffs on American soybeans, pork, and corn are dropping from 25% to 10%. Farmers can now return to that wonderful pre-2018 lifestyle of... checks notes... barely breaking even.

Chinese Manufacturers: They can breathe a sigh of relief as their factories won't be completely idle. They're probably already planning how to weather the next inevitable tariff storm in 90 days.

Enforcement? What Enforcement?

Remember the 2020 "Phase One" deal where China promised to buy $200 billion more American goods? They managed to purchase a whopping 58% of that commitment. That's like me promising to pay back my $100 loan but only returning $58 and calling it even.

The new "deal" makes Phase One look like the Treaty of Versailles in terms of enforcement. There are no purchase quotas, no binding commitments – just a vague promise to "establish a mechanism" for "regular high-level trade consultations." I've seen more binding agreements between kindergartners trading lunch snacks.

The Political Theater

For Trump, this is a classic win-win. He gets to claim he's "opening China" and delivering lower costs to American consumers after he himself raised those costs. It's like setting your neighbor's house on fire, then expecting praise for calling the fire department.

Meanwhile, Beijing initially vowed not to "capitulate to bullies" but quietly panicked as their export-dependent economy started feeling the squeeze. Chinese officials were reportedly "alarmed" by how much damage the tariffs were causing. Nothing motivates diplomatic breakthroughs quite like watching your GDP forecasts circle the drain!

What Happens Next?

When the 90-day clock runs out on August 12, we'll likely see one of three scenarios:

1. Both sides agree to extend the truce (because kicking cans down roads is what governments do best)

2. Negotiations collapse spectacularly, and we're back to tariff armageddon

3. A miraculous comprehensive agreement materializes (and I'll start believing in unicorns)

Given China's track record of "partial compliance" with trade agreements, expect option 1 or 2. Treasury Secretary Bessent already warned that China "didn't adhere" to Phase One, which is diplomatic speak for "fool me once, shame on you; fool me twice, we'll just keep doing this dance forever."

The Bottom Line

The US-China trade deficit stood at approximately $295 billion in 2024 – slightly down from the pre-pandemic peak but still massive enough to fund several trips to Mars. This deal might nudge that number slightly, but let's not kid ourselves – we're just witnessing another chapter in the world's most expensive economic standoff.

So enjoy your temporarily cheaper gadgets while you can, America! And remember, when it comes to US-China trade relations, the only thing more reliable than broken promises is the inevitable return to mutual economic hostility.

Giga Chan is the lead economic correspondent for CanAmericanNews.com. Views expressed are entirely factual but delivered with the appropriate level of exasperation that current global trade policies deserve.

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