In a significant development for global trade, the United States and China have reached a new trade agreement, which introduces a 90-day pause on recent tariffs and signals a renewed commitment to avoid further escalation in trade tensions. Speaking in Saudi Arabia, U.S. Treasury Secretary Scott Bessent addressed the implications of the deal, emphasizing that it is aimed at creating mechanisms to stabilize economic engagement between the two world powers.

Bessent made it clear that Washington is not aiming for full economic decoupling, but rather a targeted decoupling in strategic industries where the U.S. is heavily reliant on overseas manufacturing—a vulnerability sharply exposed during the COVID-19 pandemic.

Tariff Relief on Low-Value Parcels

One of the most impactful decisions in the deal is the rollback of tariffs on "de minimis" shipments. These are low-value packages—a vital element of cross-border e-commerce.

Previously, tariffs on these shipments had soared to 120%, severely affecting platforms like Temu and Shein, which depend on the duty-free import of low-cost goods to drive volume and offer competitive prices. Under the new agreement, the U.S. will slash these tariffs down to 54%, offering a huge reprieve for the e-commerce industry.

However, the U.S. will maintain a minimum flat fee of $100 on these packages. While this still poses a cost burden, the reduction in tariff percentage is expected to revive momentum for online sellers and lower costs for American consumers.

Boeing Gets the Green Light

In another notable outcome of the agreement, China has lifted its ban on Boeing aircraft deliveries, according to a report by Bloomberg News. This move is widely interpreted as a confidence-building measure that follows the trade talks.

The ban had been a major sticking point in U.S.-China economic relations, particularly due to its symbolic and economic significance. With the ban lifted, Boeing stands to regain a critical foothold in the Chinese aviation market, which is among the largest in the world.

While neither Boeing nor Chinese authorities have formally commented on this development, the report suggests that pragmatism may be overtaking protectionism—at least temporarily.

Decoupling Only in Strategic Sectors

Bessent reiterated that the U.S. has no intention to decouple entirely from China. Instead, the focus is on self-sufficiency in key strategic industries like semiconductors, pharmaceuticals, and critical technologies.

This approach was informed by the vulnerabilities revealed during the pandemic, when the U.S. struggled to source essential goods. The idea is not to sever ties entirely but to mitigate dependency risks in areas critical to national security.

Market Reaction: Initial Hype, Subsequent Caution

Following the announcement, global stock markets initially rallied, reflecting optimism that the trade war was cooling. However, this enthusiasm was short-lived.

Markets in Shanghai closed flat, and economists were quick to point out that the agreement, while constructive, does not reverse all the trade tensions of the past few years. Average tariffs remain significantly higher than they were before the U.S.-China trade conflict began.

E-Commerce Giants Poised for Growth

For platforms like Temu and Shein, this deal is especially meaningful. Both companies have based their rapid international expansion on the de minimis threshold, which allows them to ship low-cost goods directly to consumers in the U.S. without paying duties.

The previous tariff hike had significantly cut into their profit margins and pricing advantage. With tariffs reduced, their competitive edge is partially restored, allowing for potential expansion and increased consumer demand.

Future Uncertainty and Ongoing Talks

While the trade agreement marks a step forward in diplomacy, there is still much ground to cover. Negotiations are expected to continue, particularly around tech sector access, data privacy, and supply chain resilience.

Analysts warn that geopolitical risks remain and the global economy is still vulnerable to disruptions. However, this 90-day pause is viewed as a valuable cooling-off period that could lead to longer-term solutions.

Summary

To summarize, the U.S.-China trade agreement reached in May 2025 offers both economic relief and strategic clarity. By cutting tariffs on low-value parcels, allowing Boeing aircraft back into China, and focusing on selective decoupling, the deal attempts to balance national security with economic pragmatism. While the long-term trajectory remains uncertain, this development is a positive signal for global trade stability.

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