On May 12, 2025, the US and China both decided to cease fire in the ongoing trade war that has devastated the global economy for a 90-day period. Both countries called a truce in a high-stakes meeting between President Trump and President Xi Jinping at the G20 summit.
The 90-day pause, although temporary, was a much-needed reprieve for both countries and the global economy. However, despite the short-term benefits of this new agreement, experts seem to hold the opinion that the truce is like placing a bandaid on an already festering wound. In this article, we will explore its impact on businesses and consumers.
A Temporary Truce: Understanding the 90-Day Pause
The 90-day period, which kicked into effect on the 18th of May, 2025, marked a significant de-escalation in the ongoing trade war. In a trade battle so intense that America slapped China with up to 145% tariffs on several imports and China retaliated with up to 125% tariffs on American goods, the truce was a happy development. The US agreed to hold off on further increases, even decreasing tariff on Chinese imports from 145% to 30%, while China went from 125% to 10%.
Both nations reached the agreement to temporarily end the war and give a 90-day window for renegotiations in order to find a middle ground. They committed to negotiating structural changes regarding everything from technology transfer to intellectual property protection. The objective is to use the 90-day period to reach an agreement that favors both parties.
Consumer Relief: Potential Price Stagnation and Reductions
For consumers, the 90-day tariff pause was a much-needed breath of fresh air since they were at the receiving end of the war. The pause means that the impending hike on a vast array of items like popular electronics, toys, and apparel has been removed for the time being. Retailers who were already adjusting prices on the shelves could also stop and re-evaluate.
Although the price reduction did not impact all goods, it largely prevented the steep price increase consumers were waiting for. Presently, most retailers are taking advantage of this window to sell off old stock, hoping to clear their shelves before any renewed tariffs. So, the 90-day window provided an opportunity for consumers to make buying decisions without the immediate pressure of price hikes.
Business Breathing Room: Supply Chain Stability and Planning
For businesses, the 90-day period provided an invaluable breathing space for restructuring. Companies and supply chain managers who were on the cusp of laying off staff, implementing expensive re-sourcing strategies, and exploring new manufacturing bases can now take a step back. Businesses can also now take stock of their inventory, defer expensive supply chain changes, and also re-engage their Chinese shifts with a short-term action plan.
Many retailers can now bypass the necessary evil of passing on costs to customers and risking reduced sales. The window also gives businesses the time to make longer-term plans that address the possibility of a permanent resolution versus a resumption or even heightening of the trade war.
Agriculture’s Hope: A Glimmer for U.S. Farmers
US farmers, particularly those in the soybean industry, were particularly hit by the retaliatory tariffs. For these farmers, the 90-day ceasefire was a glimmer of hope for their business. Since China pledged to resume large-scale purchases of US agricultural products, farmers have become hopeful again about the future.
The prospect of renewed demand would alleviate the heavy financial burden from farmers who were reliant on exportation. Although most farmers are still unsure about what the outcome of the 90-day negotiation will be, the immediate hope for sales has left the farming sector optimistic. Most are hopeful that they’ll be able to recover some of the losses incurred at the climax of the trade war.
Technology and Trade: Navigating the Huawei Question
The tech industry was not left out of the trade dispute. Intellectual property theft and other issues surrounding tech companies like Huawei were a notable bone of contention during the battle. While the 90-day pause primarily focused on addressing the tariff issue, it also aims to discuss and renegotiate broader issues touching the tech sector.
During the tariff break, both nations hope to set clearer guidelines for tech companies operating across borders. Hopefully, the underlying tensions related to cybersecurity and technological dominance will be addressed during the truce.
Investment and Market Sentiment: A Boost in Confidence?
Since the trade war peaked, the global financial market has been experiencing severe volatility. Hence, the announcement for temporary peace came as music to the ears of already frustrated investors. The stock market reacted positively to the news, and investors felt a new sense of optimism that a full-blown trade war may well be averted.
One of the benefits of the ongoing negotiations is the confidence boost it’ll give to investors, albeit temporarily. Businesses may now start to commit to expansion plans or capital expenditures that were previously suspended due to the trade war. However, due to the temporary nature of the truce, the market remains sensitive to news from either side, which could disrupt the peace at any moment.
The Road Ahead: What Happens After 90 Days?
The question hanging over the trade landscape remains: “What will happen in the next 90 days?” Perhaps both countries would reach a successful resolution, or the negotiation period would be extended, or the tariff hike could resume. Businesses and consumers have their fingers crossed, hoping for the best possible outcome.
Both nations have agreed to try to meet in the middle during the 90 days. However, due to the complexities of the issues (intellectual property, technology transfer, and market access), finding a common ground may be quite challenging. Businesses and consumers have to remain prepared, bearing in mind that the truce is temporary and the outcome could go either way.
Global Economic Ripple Effects: Beyond the U.S. and China
While the trade war seems to be centered around the US and China, its ripple effect was widespread. So, the 90-day pause helped to alleviate the impact of the trade war on the global economy. Several other nations, especially those reliant on the US and Chinese markets for exports, also heaved a sigh of relief as they can now experience a temporary reduction in economic uncertainty.
However, the looming possibility of a continued trade war hangs over the world economy, threatening a global economic crisis. The situation demonstrates how disputes between two major economic powers could have far-reaching consequences for global economic stability.
Conclusion
The 90-day pause on tariffs was a much-needed development, offering respite and saving the economy from the brink of a full-blown trade war. For consumers, the pause means the price of goods will not skyrocket in the meantime. While for businesses, the truce offered stability for their supply chains and restructuring.
Farmers also saw a glimmer of hope with the temporary trade war halt, as they’re able to restart business with the Chinese. However, due to the short-lived nature of the truce, businesses and consumers still have their guards up. The 90-day window may close with a lasting resolution, or perhaps it is merely delaying another escalation.
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