WTF Truce?! US & China SUDDENLY Slash Tariffs After Weeks of Economic Mayhem

Remember that insane trade war with China that President Trump kicked into hyperdrive last month? The one where US tariffs on Chinese goods soared to a mind-boggling 125-145%, China retaliated in kind, global markets had a meltdown, and businesses started planning for "apocalyptic" consequences? Well, apparently, that was just a phase.

In a stunning development out of Geneva today, Monday, May 12th, the United States and China have agreed to slash those sky-high tariffs and restart stalled trade. According to AP News and trade policy analysts at SmarTrade (Thompson Hine), this "de-escalation" involves the US dropping its recent massive tariff rate on Chinese goods from the stratosphere of 145% down to 30%. China, in turn, will reportedly lower its retaliatory tariff rate on US goods from 125% to a mere 10%.

Global financial markets, understandably, rejoiced at the news, with futures jumping and oil prices surging. After all, stepping back from the brink of a full-blown trade embargo between the world's two largest economies sounds like good news.

But let's pump the brakes on the celebration and inject our Daily Dose of WTF. First, this "deal" is only for 90 days. Yes, three months. This temporary truce is meant to create time for negotiators to reach a more "substantive agreement." So, instead of a resolution, we get... more uncertainty, just with slightly less terrifying tariff numbers for a little while. Will they actually reach a deal, or will we be back to tariff Armageddon in August? Place your bets!

Second, that "slashed" US tariff rate of 30% on Chinese goods? It's still significantly higher than before Trump's recent "Liberation Day" tariff tantrum. As the AP report notes, this 30% still includes the 10% "baseline" tariff Trump slapped on most countries plus the pre-existing 20% tariff related to fentanyl. So, we went from "normal" to "insanely high" back to just "really high." Progress?

Third, and perhaps the most WTF part of this whole whiplash-inducing episode: President Trump reportedly admitted he obtained "absolutely nothing" from China in exchange for all the chaos his administration generated with the massive tariff hikes. Harvard economist Dani Rodrik is quoted as saying, "Trump has obtained absolutely nothing from China for all the chaos he generated." So, we endured weeks of market panic, business uncertainty, threats of economic catastrophe, and now a partial rollback... for what, exactly? The art of the deal, apparently.

Treasury Secretary Scott Bessent tried to put a brave face on it, telling CNBC the previous triple-digit tariffs were "the equivalent of an embargo, and neither side wants that. We do want trade." (You don't say!) He added that US and Chinese officials will meet again in a few weeks.

Toy company CEOs who had paused shipments from China are reportedly scrambling to get their goods moving again, though they still anticipate price hikes of 10-15% for consumers due to the remaining tariffs.

So, to recap: after weeks of escalating a trade war to potentially catastrophic levels, threatening global economic stability, and causing widespread panic, the administration has... partially walked it back for 90 days, achieving no stated concessions, and leaving everyone wondering what fresh chaos the next three months (or the next tweet) might bring. It's a masterclass in governing by whiplash, and a truly baffling Daily Dose of WTF.

Sources:

• AP News. "US and China reach a deal to slash sky-high tariffs for now, with a 90-day pause." May 12, 2025.

• SmarTrade | Thompson Hine. "China and the United States Agree to Temporarily Lower Tariff Rates." May 12, 2025.