Trump's 'machine gun' approach to trading partners is flawed, China analysts say

The 90-day rollback in reciprocal tariffs announced on Monday by the US and China has produced both optimism and wariness about ending a trade war that has roiled global commerce.

"The agreement was achieved after only two days of talk, which is very rare in trade talks, and the announced results are better than commonly expected," said Gao Jiang, a global trade expert and associate professor at the Institute of World Economy at Shanghai Academy of Social Sciences.

"It is a good signal that both sides gave way and have the confidence to continue to talk."

She told China Biz Buzz, "China and the US basically have had no dialogue mechanism since Trump took office in January. Now normalized channels are set up again."

US President Donald Trump said the US has achieved a "total reset" in relations with China, adding he doesn't expect tariffs on China to return to the previous 145 percent level after the pause.

Richard Dong, a machinery parts dealer based in Zhejiang Province, isn't so sure. On Monday, he said he received several calls from American clients.

"Some were inquiring about prices, and two wanted to put in orders as fast as possible to get the containers to US before the 90-day pause runs out," Dong said. "I have not lowered prices since tariffs began."

He added, "The two clients agreed to eat the cost of the tariffs that remain, but I'm actually still a little hesitant. Who knows what will happen when the products are in the middle of the Pacific?"

China's commerce minister Wang Wentao, after the joint statement was released, pledged to provide more support for the nation's exporters.

Chinese Vice Premier He Lifeng and US Treasury Scott Bessent announced the 90-day pause in Geneva. The world's two largest economies agreed to lower reciprocal tariffs imposed on one another after April 2 by 115 percentage points to 10 percent.

The joint statement did not mention other existing tariffs, such as a 20 percent US duty on China related to the fentanyl issue and China's tariffs of up to 15 percent on specific US products, including crude oil, liquified natural gas and agricultural machinery. For the moment, those levies remain.

Bessent told American news channel CNBC that he expects the talks to continue in the "next few weeks" to hammer out a larger agreement.

Investors reacted positively to the preliminary accord. US markets surged on the news, with particular gains in e-commerce, technology and toy stocks. The S&P 500 index rose 3.26 percent, and the Nasdaq ended up 4.35 percent. Benchmark Brent crude oil gained 1.7 percent, but gold dropped 3.1 percent as its position as a safe-haven slipped.

The American Apparel Footwear Association welcomed the news and called on the Trump administration to secure a long-term deal. The organization said in a statement that the remaining tariffs "will still make for expensive back-to-school and holiday seasons for most Americans."

China produces about 60 percent of the world's shoes, about 80 percent of all iPhones, and over 80 percent of the world's solar panels, among other products.

Guo Lei, chief economist of GF Securities, said the preliminary agreement acknowledges the strength and irreplaceability of "made in China" in global markets.

"It has a position that is difficult to be sustainably disrupted by external factors," he said. "Compared with 2018, China now holds combined advantages in scale and efficiency, making it impossible for any competitive regions in the world to substantially replace or challenge it."

Guo noted the better-than-expected China exports in April.

He called Trump tariffs "sweeping machine guns" that go beyond the normal scope of trade disputes over tariffs, barriers such as subsidies or quotas, competition and investment rules, and regulations on digital trade.

"Trump is bundling trade and non-trade elements all together, and is using tariffs as a leverage to force others to accede to non-trade demands, like fentanyl for China or illegal immigrants for Mexico," Gao explained. "That is essentially bullying."

Professor Luo Zhenxing with the Institute of American Studies of the Chinese Academy of Social Sciences said the "bullying has failed."

"Basically, Trump goes in a big circle and is now back to the start," he said. "China sets an example for other countries; you get a better result with a strong stance rather than caving in."