President Donald Trump’s deal to dramatically slash tariffs on China thrilled markets and offered a sliver of relief for businesses across the country. It also revealed an important lesson: Even Teflon Don can’t outrun economic reality.
The deal brokered in Geneva, in which both sides agreed to lower tariff rates by triple-digit percentages, came as anxiety mounted about a potential downturn in the U.S. The manufacturing sector, watching order books dry up, has been shrinking its workforce. Ports are warning of a plunge in shipments. Economists have been calculating significant odds of a recession.
Against that backdrop, the U.S. and China agreed to pull back from the brink of a bruising tariff fight that amounted to an all-out trade embargo between the world’s two largest economies, even as Beijing offered no commitment yet to change its trading practices.
The agreement is an acknowledgment that a full-on economic divorce of the U.S. and China would be too painful for both sides, despite outward swagger from both Trump and Beijing. Indeed, Treasury Secretary Scott Bessent underscored Monday that the goal was not “a generalized decoupling from China.”
