Navigating the Turbulent Waters: Future Prospects for US-China Relations Post Trade Truce
What’s the Outlook for US-China Relations After the One-year Trading Truce?
By Dennis Shen, Chair, Macroeconomic Council, Scope Ratings
Published: October 30, 2025, 17:22 GMT+00:00
The one-year trading truce between the US and China marks an important shift in their economic ties. It lifts many export rules, bans on imports, and fines. This break brings relief and shows that trade tensions move in cycles.
Background and Context
Scope Ratings saw the trade break coming and called it a complete deal with a short run. The deal comes when the global economy feels heavy pressure. The deal lasts one year. This time frame leaves room for change.
In talks, China used its hold on rare earth exports—key parts for many US industries—to draw the US to negotiate under President Donald Trump. China’s grip on rare earth supply gives it strong power. This move might set a pattern in talks with other US partners.
Anticipation of Renewed Trade Tensions
Even with the calm, many deal points stay unclear. New trade issues may soon come up. A US Supreme Court decision on current tariffs may bring more change. Past trends in Trump’s time show rising trade fights after short breaks.
US officials called the framework “very successful” and “very significant.” Chinese officials spoke with care and called it “preliminary” and “basic.” These word choices hint at China’s strong stance and the US’s need to solve the issues fast.
Trade ties run like a cycle. Tensions rise and calm periods come and go. President Trump talked with President Xi Jinping at times. These calls show how short calm moments can be.
Economic Impact of Existing Tariffs
Scope Ratings’ models show that tariffs still hurt both sides. The numbers hint that China’s GDP may drop by about 0.6 points, while the US may lose around 0.9 points. These effects stress the need to calm trade strain, even as tariff levels stay above old marks despite some cuts.
Looking Ahead
The one-year trade break gives a short calm, yet changes are on the horizon. The deal is in its early stage, its rules stay loose, and legal choices may shift how tariffs work. Future trade talks may follow the path of pressure and brief peace unless both sides adjust long-term plans.
About the Author
Dennis Y. Shen is Chair of the Macroeconomic Council and Lead Global Economist at Scope Ratings, based in Berlin, Germany. His work brings together views on credit and the economy across areas such as sovereign, public, bank, and business finance.
For more details on today’s global economic events, please check the economic calendar.
This article serves to inform and teach. It is not financial advice. Readers should do their own research and ask experts before making financial choices.
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