What’s Driving the Current U.S.–China Trade Truce?

1. Trade War and Tariff Talks

• Washington has “proactively reached out” to Beijing seeking negotiations over President Trump’s 145 % tariffs on Chinese goods. China’s Commerce Ministry says it is “evaluating” the offer but warns against any U.S. attempt at “coercion and extortion” and insists that unilateral levies must be lifted first .

• Meanwhile, Beijing has exempted certain pharmaceuticals and microchips from its retaliatory 125 % duties, a limited gesture suggesting both sides may be testing the waters for a broader de‑escalation .

2. Market Reactions

• Global equities rallied on signs that trade tensions might ease U.S. futures rose nearly 1 % and Europe’s FTSE 100 climbed 0.8 % after China signaled openness to talks and the U.S. paused reciprocal low‑value tariffs on Chinese imports .

• Tech giants remain under pressure: Apple warned tariffs could add $900 million to quarterly costs even as robust earnings from Microsoft and Meta supported a market rebound .

3. Diplomatic Outreach

• Beyond trade, high‑level contacts continue. Chinese Vice President Han Zheng attended Trump’s inauguration as Xi’s special envoy, and in late March Beijing’s Premier Li Qiang met U.S. Senator Steve Daines in Beijing to discuss dialogue over trade and the fentanyl crisis .

• On climate, Chinese President Xi Jinping has pledged China’s 2035 emissions plan ahead of COP 30, even as U.S. withdrawal from Paris‑level commitments under Trump clouds future collaboration .

4. Security & Military Tensions

• In the South China Sea, China’s coastguard and navy have stepped up patrols around disputed features (Scarborough Shoal, etc.), explicitly warning the Philippines against “infringement provocations” as Manila and U.S. forces conduct joint drills .

• Taiwan’s government, while confident in U.S. support under the Taiwan Relations Act, watches warily as Trump floats “100 % tax” threats on TSMC and pauses reciprocal tariffs on the island raising fears Taipei could be a bargaining chip in broader U.S.‑China talks .

5. Limited Cooperation in Climate & Space

• Despite political friction, China and the U.S. maintain pockets of collaboration: China plans to lend moon rock samples to NASA‑funded U.S. universities even as trade barriers persist .

• On climate, both sides publicly reaffirm the importance of joint action Xi vowed “action will not slow” on emissions, while U.S. envoys speak of narrowing finance‑gap differences even though formal talks remain paused under current administrations .