Tariff War on Hold, New Global Consensus Taking Shape | Overseas Business Insights

“It's like finally being fished out of the river. That's the feeling.” After the China-US Joint Statement on the Geneva Economic and Trade Talks was released on May 12, Chen Li, who does bulk clothing trade in Yiwu, finally felt relieved and immediately contacted his American customers to “rush the shipment”.

According to the joint statement released by China and the US, the US side promised to cancel a total of 91% of the tariffs imposed on Chinese goods on April 8 and 9, and China will correspondingly cancel 91% of the counter - tariff measures; regarding the 34% reciprocal tariffs imposed on Chinese goods on April 2, the US will suspend the imposition of 24% of the tariffs for 90 days and retain the remaining 10% of the tariffs. China will also correspondingly suspend the implementation of 24% of the counter - tariff measures and retain the remaining 10% of the tariffs.

After more than 40 days of extreme tug - of - war, China, with a firm stance and timely counter - measures, safeguarded its legitimate rights and interests and international fairness and justice. It also successfully made the US stop the crazy tariff hikes and return to the negotiation table.

Judging from the market reaction, “the extent of this tariff cut exceeded expectations”. Many international financial institutions such as JPMorgan Chase, Mizuho Bank, and Deutsche Bank all gave positive evaluations of the joint statement on the same day. The three major US stock indexes also recorded their largest single - day percentage gains since April 9. As of the close, the Dow rose 2.81%, the Nasdaq rose 4.35%, and the S&P 500 index rose 3.26%.

In the short term, the preliminary agreement reached between China and the US allows enterprises on both sides to take a breather and provides support for injecting positive sentiment into the market; in the long term, everyone also realizes that this is far from the end of the tariff dispute. The continuous changes in the international trade pattern are forcing enterprises to form a new global consensus.

How will the negotiation on more detailed rules in the subsequent agreement progress? Will Trump suddenly change his mind? What kind of tariff agreements will the US reach with other countries... The tariff stick has been gently put down, but the world of the past is gone forever.

April in the foreign trade industry: Panic and anxiety

Since the second half of last year, Chen Li has found that doing business in the US has become more difficult. “The orders were gradually decreasing, and Trump was re - elected President of the US. I thought there would be frictions at that time, but who would have thought he'd drop a 'nuclear bomb'. I really wasn't prepared.”

On April 2, when the US “reciprocal tariff” policy was introduced, the entire foreign trade circle in Yiwu was stunned by this “nuclear bomb”. Deng Yu, who works in the Yiwu International Trade City, recalled, “The next day, the city leaders came to visit and comfort everyone. Since the leaders came, we all understood how serious the situation was.”

Early in the morning of April 9, the “reciprocal tariff” policy officially took effect. One day later, all of Chen Li's US orders were cancelled by the customers. “The customers also couldn't understand Trump's decision. They dared not suddenly adjust the prices and couldn't bear such high tariffs.”

Suddenly out of business, Chen Li fell into intense anxiety for the next month. “I just couldn't accept it mentally. I had to keep bargaining with the customers every day.” Some American customers asked Chen Li to bear part of the losses, and some discussed sharing the tariff costs with him. “They are also afraid of losing the domestic market and want to ship some important goods first.”

According to the statistics of the General Administration of Customs of China in 2024 by Caijing Magazine, the export of textile products to the US accounted for 32.2%, ranking first among all industries, so it was greatly affected by the tariff hikes. And Chen Li, whose main business is offline bulk trade with the US, belongs to the most affected group in the textile industry.

In addition to textiles, wigs and beards made of human hair are another “hard - hit area”. More than 80% of the world's wig products come from China, and in 2024, the export of such products from China to the US accounted for as high as 62.02%.

Most of these products come from Xuchang, Henan, a famous wig industry belt. “The impact on us is huge,” Wang Min, who works in a wig company in Xuchang, told us. Last month, the company shut down for a week. After the tariff hikes, the traditional trade orders in the entire industry belt basically stopped completely, accounting for 60% of the market volume. “To stabilize the employees' emotions, most enterprises here have temporarily adjusted or slowed down their production plans, allowing employees to work in shifts or reducing working hours to maintain operations.”

Although consumer electronics industries such as smartphones, lithium - ion batteries, and tablets also have a high export scale to the US, compared with traditional industries such as clothing or wigs, they have relatively higher technological content and greater bargaining power, so they also have relatively stronger ability to resist tariff shocks.

Among them, consumer - upgrade electronic products that are not in rigid demand and consumers can choose whether to buy or not are obviously more affected. For example, AI hardware that highly depends on the US market. According to the report of Intelligence Emergence, based on industry experience, for every 50% tariff increase, the net profit margin of AI hardware enterprises drops by 10%. If the terminal selling price does not increase, a tariff of over 100% will make all AI hardware enterprises' US business unprofitable. Before the tariff agreement was reached, many investment institutions in the industry were ready to suspend their investment in related projects.

The US attitude eases unexpectedly, and foreign trade enterprises “take a breather”

Huo Jianguo, the former director of the Chinese Academy of International Trade and Economic Cooperation and a senior foreign trade expert, previously estimated that without effective progress in the negotiations, the “reciprocal tariff” policy would last at least 3 - 5 months, and whether Trump would change his mind mainly depends on the performance of the US economy.

For the US, in addition to reducing the import of Chinese consumer goods and possibly causing inflation, the export of products such as agricultural products, energy, and Boeing aircraft to China will also be affected by China's counter - tariff measures.

Just when everyone was prepared to “endure a hard time”, the US changed its attitude after only one month:

On April 11, the US Customs and Border Protection (CBP) issued an updated guide on reciprocal tariff exemptions, announcing tariff exemptions for 20 items such as consumer electronics, servers, and semiconductor devices, mainly targeting the Apple supply chain and NVIDIA's AI servers.

On April 15, the White House website said that China could face tariffs of up to 245%, but it was not officially implemented.

On April 17, the government of California, USA, sued the Trump administration's tariff policy, saying that it damaged the state's economy.

On April 22, the US side said three times that tariff negotiations could be carried out between China and the US, and an agreement could even be reached in a relatively short period of time.

On April 23, Trump sent a signal of easing, saying that the 145% tariff on China was indeed too high and that the tariff on China would be significantly reduced, but not to zero.

But until early May, the market still couldn't see the possibility of progress in the China - US trade negotiations. On May 2, the US officially cancelled the T86 policy of “small - value exemption for parcels under $800” for China. On May 8, a spokesperson for the Chinese Ministry of Commerce said, “Want to talk? Sure, but if you say one thing and do another, or even try to sacrifice China's principles and positions to reach an agreement, that's absolutely impossible.”

Therefore, the release of the China - US Joint Statement on the Geneva Economic and Trade Talks on May 12 was quite a surprise for many merchants in the same situation as Chen Li. “Finally, we can take a breather.”

On the same day, Trump issued an amended executive order, reducing the ad - valorem tariff rate for small parcels under $800 from 120% to 54% and maintaining the specific tariff of $100 per small postal item. At the same time, the original plan to increase the specific tariff for small postal items from $100 to $200 on June 1 was revoked. The fixed tariff of $100 per item took effect on May 2 (originally June 1) - which means that the customs clearance cost of small parcels will be significantly reduced.

Wang Min told us that many factories in the Xuchang wig industry belt have resumed orders from the US. From May to July, it is the off - season for the US wig market because of the hot weather. The existing backlog of inventory can be digested by July at most, and subsequent orders will also resume gradually. However, the tariff conflict has still caused irreparable losses to the merchants. Wang Min estimated that 30% of the company's sales this year have been affected.

Facing the losses, Chen Li comforted himself, “This is already the best result.”

In the era of Globalization 2.0, going global with a new consensus

Chen Li thinks that the farcical tariff war in the past month “is like a couple getting divorced and then remarrying. There will always be some estrangement. Even without this tariff war, the golden age of foreign trade in the past is gone forever, and business will definitely not return to the previous level.”

In the early 1990s, with the disintegration of the Soviet Union, the world entered the era of globalization. Looking back today, Globalization 1.0 was essentially a global trade and financial system centered around the US. The high trade deficits of the US with many countries around the world today are also an inevitable result of this “old order”.

Since Trump was first elected President of the US in 2017, the world has been moving towards the trend of “de - globalization”, or rather, gradually entering the era of Globalization 2.0 with more multilateral economic and trade relations.

“This is the worst of times, and it is also the best of times.” Amid Trump's vacillations, foreign trade practitioners have gradually emerged from their initial panic and anger and begun to form a new consensus on the current world pattern: that is, in the future, enterprises going global will no longer be about expanding into a single market or simply exporting goods, but rather a market layout of “born to be global” and a more regional reconstruction of the value chain.

However, it is not easy for enterprises that have been used to a “comfortable life” relying on the US market for a long time to change their business ideas.

Chen Li believes that for merchants like him with low risk - resistance ability, transferring the market is another riskier gamble. “It's safer not to move than to make hasty moves. At worst, I'll just earn less. I can make slow adjustments when there are opportunities in the future.”

Some stronger enterprises have already taken action and shifted their business focus to the European market. “Several big sellers who only did business in the US have come here,” Li Luwei, who runs an independent website for outdoor furniture in France, noticed that after the US imposed tariffs, more Chinese sellers appeared in the previously “peaceful” European market. “They directly compete with us by offering lower prices and grab the market share. I've also been thinking about how to deal with it recently.”

E - commerce platforms are also following this trend. Since last year, they have been giving more traffic to the semi - managed model with overseas warehouses or local - to - local merchants. According to data from market intelligence firm Sensor Tower, in April 2025, Shein's advertising spending in France and the UK increased by 35% month - on - month, and Temu's spending also increased by 40% and 20% respectively.

Su Jian, one of the earliest top sellers on Temu, revealed that the proportion of the North American market in Temu's overall business has dropped to 20% this year, and the importance of Shein's US business is also declining. “The best way is to follow the platform and sell wherever it's possible.”

Some once - neglected marginal markets are also being rediscovered by more merchants. In the past month, Zha Jiulan, the founder of the African B2B integrated e - commerce platform Egatee, has continuously received calls from merchants. “Many merchants who lack competitiveness in the mainstream markets and are hesitant about doing business in Africa are asking me how to open an account.”

Whether to continue to be a firm “US market advocate” or to turn the ship in time to find new opportunities, in the foreseeable future, enterprises will continue to move forward in the fog with complex emotions. But the direction of “going global” will not change. As Chen Li said, “For us in the foreign trade industry, if we don't go global, what else can we do?”

Grass - roots entrepreneurship is the characteristic of Chinese foreign trade people. In the past, although these bosses from all over the country had different backgrounds, they could always put down roots with a spirit of perseverance. After rounds of industrial upgrading and development leaps, entrepreneurs have continued to emerge, tackling problems in different fields and embarking on the path of technological innovation and brand entrepreneurship.

It is foreseeable that the development resilience of the Chinese economy and industries can support more and more enterprises to weather the ups and downs, get through the short - term pain, and move from a single market to the global stage.

This article is from the WeChat public account “Hangzhou Qiantang Enterprise Going Global Service Base”. Author: Qiantang Going Global. Republished with permission from Qiantang.