• Trump expresses willingness for China to "open up" its economy, marking a shift in tone amid recent trade progress.
  • US and China agree to mutual tariff reductions, with a 10% baseline US tariff remaining in place.
  • Business groups welcome the thaw, though structural tensions on tech and IP remain unresolved.

A Shift in Trade Rhetoric

Donald Trump recently stated he would "love to see" China further open its economy, signaling a notable softening in rhetoric as both nations navigate a fragile trade détente. The comments follow a May 2025 agreement to mutually reduce tariffs by 115%, retaining a 10% baseline US tariff while halting retaliatory measures.

Treasury Secretary Scott Bessent described ongoing talks as "constructive," with discussions leaning toward a potential Trump-Xi summit later this year. The shift comes after early 2025 saw escalated tensions, including threats of 60% tariffs on select Chinese imports—a move economists warned could shrink US GDP by 1.3% long-term.

Pragmatism Over Confrontation

Recent negotiations reflect a step-by-step approach, prioritizing quick economic wins like increased Chinese purchases of US goods over sweeping structural reforms. The US has eased some tech export restrictions, including on AI chips and EDA software, while China has pledged policy support for domestic firms impacted by tariffs.

"We’re seeing a deliberate cooling-off," said one industry lobbyist familiar with the talks, noting that agricultural and tech exporters stand to benefit most. Still, hawkish voices warn against relaxing pressure on China’s industrial policies, leaving the durability of the thaw uncertain.

Market Reactions and Risks

While businesses welcome reduced planning uncertainties, analysts caution that underlying disagreements—particularly on technology transfers and intellectual property—could reignite friction. The EU and other trading partners are adjusting their China strategies in response, weighing re-engagement against supply chain resilience concerns.

Correction: An earlier version misstated the baseline US tariff as 15%; it remains at 10% post-reduction.