BEIJING– China has announced a major cut to its tariffs on US imports, reducing them from 125% to just 10% for the next 90 days, beginning May 14, 2025. This unexpected move follows tough trade discussions in Geneva and has sparked renewed optimism in global markets.
Investors hope this pause will ease some tension between the world’s two largest economies, at least for now. Still, people and businesses in Chiang Rai are watching closely, as China’s economy faces tough times with slow growth, high youth unemployment, and many factories closing.
The tariff reduction was confirmed after direct talks in Geneva, where US and Chinese officials, including US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer, reached a short-term deal. Both sides agreed to pause their trade dispute, with the US also lowering its tariffs on Chinese products from 145% to 30% for the same period.
China’s finance ministry said it would also drop export restrictions on key materials like rare earth minerals, a welcome relief for high-tech industries around the world.
These talks, held over the weekend of May 10-11, 2025, marked the first in-person meeting since the US imposed steep tariffs under President Donald Trump’s “Liberation Day” policy in April.
Rising tariffs had nearly stalled the $600 billion in trade between the two countries, causing global supply chain headaches. The new agreement is seen as progress towards better trade relations. Bessent explained, “Neither side wants a trade freeze. We want to keep trading.”
Stock Markets Surge Worldwide
News of the tariff cuts sent stock markets soaring. The Shanghai Composite and Hong Kong’s Hang Seng both rose over 1%, shaking off earlier doubts about trade tensions. On Wall Street, the S&P 500 jumped 3.3% , hitting its highest level since early March. The Nasdaq gained 4.3%, its best closing since late February, and the Dow climbed 2.8%, rising more than 1,100 points. In Europe, the STOXX 600 lifted 0.8% , while the US dollar strengthened as the euro dropped 1.5%.
For Chiang Rai, where many Thai exporters depend on steady international trade, this rally brings new hope. Local companies in farming and manufacturing have felt the pinch from the US-China dispute, as prices and supply chains have shifted. The tariff cuts could ease some of this pressure, making imports cheaper and supporting Thai exports to both countries.
Still, experts warn this boost could be short. The pause is only for three months, and no one knows if a lasting deal will follow. Jan von Gerich, chief market analyst at Nordea, said, “It’s a good start, but it’s only for three months. There’s still a lot up in the air.”
China Faces Slow Growth and Rising Unemployment
While markets react positively, China is still wrestling with serious economic troubles. Growth has slowed, and prices keep rising, a mix known as stagflation. The International Monetary Fund and banks like Goldman Sachs and UBS have lowered their growth forecasts for China in 2025 to about 4%, under Beijing’s 5% goal. The ongoing trade war and weak consumer spending have weighed heavily.
China’s purchasing managers’ index (PMI) fell to 49.0 in April 2025, showing the fastest factory slowdown in over a year. Many factories have cut production or closed, putting workers on leave. In export-heavy cities like Yiwu and Dongguan, factories making toys, sports gear, and other goods have been hit hardest.
Youth unemployment is a growing crisis, with unofficial reports showing rates over 20% in cities. Many young graduates are struggling to find work, causing concern across society. The weak property market and slow consumer spending only add to the problem. “China’s economy is under real strain,” said Wang Qing, chief macro analyst at Oriental Jincheng. “More support is needed.”
Beijing has promised more economic help, with plans for more government spending and lower interest rates to help companies and workers. The National Development and Reform Commission said new policies are coming in the second quarter of 2025, but many doubt these will fix deeper problems.
Factory Closures and Shifting Trade Routes
The trade war has hit Chinese factories hard, especially those selling to the US. Orders have dropped, leading to factory shutdowns across the country. Cameron Johnson, a business consultant in Shanghai, said many factories have stopped production and sent workers home. “It’s not widespread yet, but there’s concern it could get worse,” he said.
Some Chinese companies are now looking to new markets like Brazil and Ghana, where sales have doubled since 2018. Others, backed by large firms like Jd.com and Meituan, are selling more products at home. Still, these efforts can’t replace the huge US market, which bought over $520 billion of Chinese goods in 2024.
In Chiang Rai, local manufacturers could benefit as Chinese competition fades in some regional markets. Thai exporters might win more business in Southeast Asia if they can adapt to the changing trade environment.
What This Means for Thailand
The tariff cuts give Thailand a reason to hope . The Thai economy, which relies on farming and trade with China, could see lower prices for imported equipment and goods. This move might help farmers and small businesses and offer relief to Thailand’s export-based economy, which has struggled with global trade shocks.
But China’s troubles could still hurt demand for Thai products, especially rice and rubber. Factory closures and slow growth in China could also affect supply chains across Southeast Asia, putting Thai manufacturing and transport at risk.
With the three-month truce now in place, the world waits to see what comes next. The tariff cuts give China some room to breathe, but won’t solve its deeper economic problems. For the US, it’s a step away from conflict, but big differences remain. In Chiang Rai, people hope the deal leads to lasting stability in global trade.
The Geneva meetings bought some time, but reaching a final agreement won’t be easy. As one European analyst said, “This is like a mix of Chinese opera and soap opera—lots of drama and a story that takes years to finish.” For now, markets are celebrating, but uncertainty remains.
