Angela Huyue ZhangandS. Alex Yang

Opinion | Why the US-China trade ceasefire won’t save Christmas

Trump’s trade war has already done harm, disrupting the months-long process that gets Chinese-made toys in US stores before the holidays

Reading Time:3 minutes

Why you can trust SCMP

A child rides a toy car near Yantian port in Shenzhen, China, on May 9. If a made-in-China toy is to reach store shelves in the US before the holidays, the production process must begin as early as March, when toy companies finalise product designs and place orders. Photo: Reuters

Angela Huyue ZhangandS. Alex Yang

Published: 6:30pm, 13 May 2025

The White House announced on Monday that the United States and China will temporarily suspend or lift the import tariffs they imposed on each other in April, pending further negotiations on a trade agreement. But while the announcement offers long-awaited relief to businesses and has boosted market confidence, investors would be wise to curb their enthusiasm.

Taking cues from his background in business, US President Donald Trump uses tariffs as a bargaining chip, seemingly convinced that aggressive escalation will force US trading partners to offer significant concessions and enable him to declare a major political victory. But negotiating a trade agreement is not the same as striking a real estate deal. The process is slower, messier and far more consequential.

This is particularly true when the US is negotiating with China, which has both a huge economy (and thus substantial leverage) and a strong interest in withholding concessions, because yielding to Trump’s demands could undermine national pride and trigger a domestic backlash. And while Trump has a record of declaring dubious victories, it would be difficult for him to claim success in his trade war with China if he simply backed down. As a Chinese saying goes, once you are riding a tiger, it is difficult to get off.

As one of us has previously written, a trade agreement between the world’s two largest economies would be difficult to draft and nearly impossible to enforce. We saw this clearly in 2018-19. Although the US and China were negotiating an agreement around April 2019, the talks fell apart, owing to differences over the specificity of the terms.

Whereas the US demanded a rigid, 150-page contract detailing legal reforms to be enacted through China’s national legislature, China sought a more flexible, principles-based framework that could be implemented through less visible regulatory measures.

Then there is the enforcement challenge. When the US and China signed their phase one trade deal in January 2020, Trump declared it a historic victory, touting China’s commitment to increase purchases of US goods and services by US$200 billion over two years, along with other concessions.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x