Introduction
On May 12, 2025, the United States and China announced a significant de-escalation in their ongoing trade conflict. In a surprising turn of events, both the U.S. and China Slash Tariffs in 90-day Truce, reducing reciprocal tariffs that had previously reached unprecedented levels. The U.S. lowered tariffs on Chinese goods from a peak of 145% to 30%, while China reduced its tariffs on U.S. imports from 125% to 10%. This agreement, reached during negotiations in Geneva, aims to provide temporary relief to global markets and businesses affected by the prolonged trade war .
This development raises critical questions about the legal frameworks governing international trade, the historical context of U.S.-China economic relations, and the broader implications for global trade policy. As noted by Dr. Emily Chen, a trade law expert at Georgetown University, “This truce represents a significant, albeit temporary, shift in the U.S.-China trade dynamic, highlighting the complex interplay between economic policy and international law.”
Legal and Historical Background
Applicable Laws and Statutory Authorities
The U.S.-China trade relationship is governed by a complex web of domestic laws and international agreements. Key among these are:
- Trade Act of 1974: Grants the President authority to impose tariffs and negotiate trade agreements.
- Section 301 of the Trade Act: Allows the U.S. to enforce trade agreements and address unfair foreign trade practices.
- International Emergency Economic Powers Act (IEEPA): Provides the President with broad powers to regulate commerce during national emergencies.
- World Trade Organization (WTO) Agreements: Both countries are members, and their actions are subject to WTO rules and dispute resolution mechanisms.
Historically, these laws have been invoked to address various trade disputes. For instance, Section 301 was used extensively during the Reagan administration to counteract Japanese trade practices. The current application of these laws in the U.S.-China context reflects a continuation of using domestic legal tools to address international trade concerns.
Historical Context
The U.S.-China trade relationship has evolved significantly over the past few decades. Following China’s accession to the WTO in 2001, trade between the two nations expanded rapidly. However, concerns over trade imbalances, intellectual property rights, and market access have persisted.
The trade tensions escalated in 2018 when the U.S. imposed tariffs on Chinese goods, citing unfair trade practices. China retaliated with its own tariffs, leading to a tit-for-tat escalation. The recent agreement marks a temporary pause in this ongoing conflict, reminiscent of previous trade truces but unique in its scale and the legal mechanisms employed.
Case Status and Legal Proceedings
The current agreement is not a formal treaty but rather a temporary arrangement facilitated through executive actions. In the U.S., President Trump’s administration utilized executive orders to adjust tariff rates, leveraging the authority granted under the Trade Act and IEEPA. Notably, the “Liberation Day” tariffs announced in April 2025 significantly increased duties on Chinese imports, which have now been partially rolled back .
China’s response involved both tariff adjustments and non-tariff measures, including export restrictions on critical minerals. These actions have prompted discussions within the WTO, although formal dispute resolution proceedings have yet to be initiated.
The 90-day truce includes provisions for ongoing negotiations, with the next round of talks scheduled for June. The outcome of these discussions will determine whether the temporary reductions become permanent or if the trade war resumes.
Viewpoints and Commentary
Progressive / Liberal Perspectives
Progressive commentators have expressed cautious optimism regarding the truce. Senator Elizabeth Warren stated, “While the tariff reductions provide short-term relief, we must focus on establishing fair and enforceable trade agreements that protect workers and the environment.” Advocacy groups have emphasized the need for transparency in negotiations and the inclusion of labor and environmental standards in any long-term agreements.
Legal scholars have also highlighted concerns about the use of executive authority in trade policy. Professor Michael Davis of Harvard Law School noted, “The extensive use of executive orders to manage trade relations raises questions about the balance of power between the legislative and executive branches.”
Conservative / Right-Leaning Perspectives
Conservative voices have largely supported the administration’s approach, viewing the tariffs as a necessary tool to counteract China’s trade practices. Senator Marco Rubio commented, “This agreement is a step toward holding China accountable and ensuring a level playing field for American businesses.”
Think tanks like the Heritage Foundation have praised the use of tariffs to address national security concerns, particularly regarding China’s role in the fentanyl crisis. They argue that economic pressure is an effective means of compelling policy changes in adversarial nations.
Comparable or Historical Cases
The U.S.-China tariff truce is best understood through a comparative lens that draws on historic episodes of economic brinkmanship and trade recalibration. Perhaps the most resonant precedent is the U.S.-Japan trade tensions of the 1980s, when the United States, alarmed by a growing trade deficit and perceived unfair practices, imposed a series of retaliatory tariffs and demanded structural reforms. Under the Omnibus Trade and Competitiveness Act of 1988, which strengthened the application of Section 301 of the Trade Act of 1974, the U.S. targeted Japan’s semiconductor, auto, and electronics sectors. The outcome was a series of managed trade agreements, including the 1986 Semiconductor Agreement, designed to curb anti-competitive practices and open Japanese markets to U.S. exports. These efforts were widely viewed as a short-term success but also contributed to economic stagnation in Japan and long-term diplomatic strain.
Another instructive episode is the U.S.–European Union steel and aluminum dispute that erupted in 2018. Invoking Section 232 of the Trade Expansion Act of 1962, President Trump imposed steep tariffs on steel and aluminum imports from the EU, citing national security grounds. The EU swiftly retaliated with tariffs on iconic American goods. Ultimately, both sides reached a détente in 2021 under President Biden, creating a “tariff-rate quota” system while continuing negotiations on carbon emissions in steel production. This case illustrates how security rationales and retaliatory tariffs, while legally grounded, can distort markets and damage alliances without sustained diplomacy.
In both examples, unilateral tariff actions by the United States led to temporary gains but risked long-term geopolitical fallout and economic inefficiencies. These historical episodes also underscore the difficulties of achieving structural reforms through tariff pressure alone, especially when legal challenges through the World Trade Organization (WTO) remain cumbersome and slow.
The present U.S.-China truce echoes these past episodes in both strategy and uncertainty. As Dr. Susan Thornton, a former senior U.S. diplomat and China specialist at Yale Law School, puts it, “This truce isn’t a reset; it’s a reprieve. We’ve seen these kinds of pauses before—what matters is whether the underlying conditions change.” That key lesson from historical trade skirmishes—temporary relief does not equal resolution—must guide policymakers moving forward. Ultimately, the truce may reflect a recurring pattern of reactive trade policy rather than a proactive, rules-based global trade vision.
Policy Implications and Forecasting
The temporary tariff reductions brokered between the United States and China carry complex and layered policy implications. In the short term, the truce offers immediate economic relief for industries most vulnerable to retaliatory tariffs, particularly agriculture, automotive, and consumer electronics. U.S. farmers, for instance, saw soybean exports to China rebound within days of the agreement. Financial markets responded optimistically, with the S&P 500 and Dow Jones Industrial Average both climbing significantly following the announcement. However, experts caution that such benefits are ephemeral without a lasting framework for resolution.
From a policy standpoint, this truce tests the boundaries of executive authority in trade. While the President has broad statutory powers under Section 301 and the International Emergency Economic Powers Act (IEEPA), there is growing concern in legal circles over the circumvention of congressional oversight. Professor Kathleen Claussen of Georgetown Law observes, “The rise of executive-driven trade diplomacy—especially through informal truce mechanisms—erodes transparency and legislative input in shaping long-term trade strategy.” The lack of binding legislative ratification also leaves the agreement vulnerable to reversal, especially in a politically polarized environment.
Internationally, the truce may embolden other trading partners to adopt a more transactional approach, undermining multilateral systems like the WTO. If the world’s two largest economies continue to resolve disputes through bilateral brinkmanship, it could further marginalize international arbitration forums and exacerbate fragmentation in the global trading order. The Brookings Institution warns that, “What we’re witnessing is a de facto decoupling—not just of supply chains, but of norms and enforcement mechanisms.”
Moreover, the link between trade policy and national security—highlighted by U.S. concerns over Chinese fentanyl precursor exports—introduces yet another layer of complexity. The intertwining of economic and security objectives risks instrumentalizing tariffs in ways that blur the line between commercial leverage and diplomatic coercion.
Looking ahead, the most likely outcomes fall into three scenarios: (1) the temporary truce evolves into a durable, rules-based framework through continued negotiations; (2) the agreement collapses, and tariffs are reinstated, possibly at higher levels; or (3) a hybrid outcome emerges, where key sectors are exempted while strategic industries remain protected. In any scenario, legal scholars agree that institutional reform—both at the WTO and within U.S. trade governance structures—will be essential for ensuring transparency, equity, and long-term stability in global trade relations.
Conclusion
The May 2025 tariff truce between the United States and China represents more than a temporary policy shift; it reflects the fundamental constitutional, political, and legal tensions that define contemporary trade diplomacy. At its core, this development poses difficult questions about executive power, legislative oversight, international cooperation, and the limits of unilateral economic coercion.
On one side of the debate are those who see the truce as a pragmatic and necessary step toward de-escalation. Temporary reductions in tariffs have yielded immediate economic benefits, signaled goodwill to investors, and opened the door to further dialogue. As Ambassador Carla Hills, former U.S. Trade Representative, remarked, “Trade truces are valuable opportunities to recalibrate—not retreats but recalculations.”
Yet, skeptics warn that the truce may serve merely as a political maneuver, lacking the structural underpinnings required for sustainable peace in trade relations. The absence of binding mechanisms, legislative input, or third-party arbitration—hallmarks of formal agreements—makes this a legally fragile and politically reversible arrangement. The reliance on executive authority alone, while permissible under existing statutes, marginalizes Congress and raises alarms among constitutional scholars who worry about precedent creep.
Equally important is the international message sent by such bilateral maneuvers. In bypassing the WTO and other multilateral systems, both nations signal that global trade rules may be subordinate to geopolitical interests. This shift risks normalizing a transactional mode of diplomacy that undermines the predictability and fairness long prized in global commerce.
As negotiations proceed into the next phase, the truce will be tested not just by economic indicators but by the depth of mutual concessions and legal commitments. Will the temporary relief lead to systemic change, or will it be yet another pause before escalation?
The stakes are high. U.S.-China trade relations do not merely affect bilateral economic flows—they shape the contours of the 21st-century global order. As Professor Anne-Marie Slaughter of Princeton writes, “Trade diplomacy is no longer about tariffs and quotas—it is about values, governance, and who writes the rules of the global economy.”
For Further Reading:
- “U.S.-China Trade Deal Turns Back Clock On Tariffs; S&P 500 Soars, But Risks Remain” – Investors Business Daily
https://www.investors.com/news/economy/us-china-trade-deal-90-days-sp-500/ - “Trump and China call off the divorce” – Politico
https://www.politico.com/news/2025/05/12/trump-and-china-call-off-economic-divorce-00343044 - “US businesses that rely on Chinese imports express relief and anxiety over tariff pause” – AP News
https://apnews.com/article/0c12feba442877de63d5009c2c300f55 - “Wall Street surges after US and China agree to slash tariffs in 90-day pause – as it happened” – The Guardian
https://www.theguardian.com/business/live/2025/may/12/us-china-trade-war-talks-stock-markets-oil-dollar-gold-business-live-news - “U.S. and China Slash Tariffs in 90-Day Truce: A Legal and Policy Analysis of the Temporary Trade Reset” – The Wall Street Journal
https://www.wsj.com/economy/trade/what-the-u-s-china-tariff-rollback-means-for-the-american-economy-7bfc05f6