Trump's China deal: ceasefire in the trade war

Christmas is coming soon. At least for retailers who are now slowly stocking up their goods. A sensitive issue in the US has become more acute by the day: Empty shelves are looming because prohibitively high tariffs mean hardly any Chinese freighters are docking in US ports. Christmas without toys made in China? And if so, at twice the price due to a 145 percent import tariff? You don't have to be a big populist to sense the explosive potential.

This prospect is likely a key reason for the rapid progress in the US-China trade dispute. Donald Trump demonstrated openness even with his choice of negotiator: Treasury Secretary Scott Bessent is considered one of the few competent pragmatists in the administration—"the adult in the room" who reportedly doesn't share the president's enthusiasm for tariffs. Sitting across from him was a Chinese delegation that also has a keen interest in easing tensions. After all, millions of jobs in the country depend on the export of cheap goods and electronics.

This led to the pleasant surprise in Geneva. For 90 days, the mutually imposed tariffs will be drastically reduced, and a framework for negotiations has been agreed upon. This represents significant progress, at least in terms of atmosphere, and could be enough to avert the feared recession for the time being.

With one sentence, Bessent even went remarkably far: Neither side wants "economic decoupling," he said in Geneva. That sounded different so far and would represent a genuine course correction. The only question is whether it will last. That will depend on what Chinese concessions Bessent announces in the next three months. There is still no peace in the trade war, but rather a temporary ceasefire.

So far, all that has been achieved is a return to the basics—with still high tariffs on both sides, tough trade restrictions, and competing global political interests. Trump hasn't come any closer to achieving any of the goals he pursued with the tariffs. In ascending order of difficulty: combating the drug fentanyl, generating tariff revenue, reducing the US trade deficit, reindustrializing the US, technological resilience...

At least he has achieved one thing: Nervousness is likely to grow in Brussels – just as the self-proclaimed "dealmaker" intended. Europe hasn't yet progressed beyond informal talks with the US. They consoled themselves with the idea of ​​improving relations with Beijing – in the belief that more of Trump's losers are sitting there.

If the US and China truly cut the Gordian knot and reorganize their trade relations, this could also result in a deal that is to the detriment of third parties, namely the Europeans. But we haven't reached that point yet. A lot can still happen, even before Christmas.