The global trade pattern in 2025 has ushered in an important positive signal. The top leaders of China and the United States have reached a trade truce agreement. The core content includes halving tariffs on fentanyl, a one-year tariff suspension, relaxation of export controls, and reduction of maritime fees. China’s effective tariff rate has dropped from 41% to 31%, injecting key impetus into cooling the tense situation in global trade.
This trade truce has had a significant positive impact on both China and the United States as well as the global economy. For China, it will directly benefit the export industry in the short term, especially industries related to agricultural product and energy imports, while reducing policy uncertainty in corporate capital expenditure. Data shows that China’s real GDP growth rate is expected to be 4.7% in 2025 and will slow down to 4.3% in 2026, with the growth rate in the fourth quarter possibly dropping to 4.0%. Consumption and real estate remain the main drags, and the improvement of the trade environment will provide important support for economic growth. In terms of inflation, China’s CPI is expected to be -0.1% in 2025 and will rise to 0.0% in 2026. Deflationary pressure has been marginally alleviated, but continuous policy support is still needed.
On the U.S. side, although the tariff adjustment may ease some inflationary pressure in the short term, the previous impact of tariffs on consumer inflation has been very significant. Currently, tariff costs have contributed 30-50 basis points to the core PCE inflation, accounting for 50-70% of the total cost. Categories with a high proportion of Chinese imports, such as toys, have seen obvious price increases. After cutting interest rates by 25 basis points in October, the Federal Reserve has clearly suppressed the expectation of another interest rate cut in December. It is expected to maintain policy stability in the short term and end the balance sheet reduction operation in December. The U.S. economic growth has shown resilience. The real GDP growth rate is expected to be 2.0% in 2025 and remain at 1.9% in 2026. There is a continuous game between the resilience of the consumer side and the supply shock caused by tariffs.
At the global level, the China-U.S. trade truce has brought stability to the volatile international economic and trade environment, helping to ease the tension in the global supply chain and boost corporate investment confidence. The IMF pointed out in its latest report that the cooling of trade frictions will reduce the downside risks of the global economy, especially benefiting emerging economies that rely on the Chinese and U.S. markets. However, the one-year term of the agreement also means that there are still uncertainties in the future. The deep-seated differences between the two parties in areas such as technology trade and market access have not been completely resolved, and the long-term trend of global trade diversification and supply chain restructuring will continue.
