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A 90-Day Truce? Why a US-China Tariff Pause is Now on the Table

Marcus LeeThursday, May 8, 2025 1:44 am ET

24min read

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The escalating U.S.-China tariff war has thrown global supply chains into chaos, with container imports from Asia to the U.S. projected to drop 15–20% by May 2025, according to Bank of America. But amid the turmoil, a flicker of hope emerged: the head of the U.S.-China Business Council, Sean Stein, recently suggested a 90-day tariff pause is a “reasonable expectation” from ongoing talks. While the two nations remain locked in a bitter standoff—U.S. tariffs on Chinese goods now sit at 145%, with China retaliating at 125%—the possibility of a temporary truce is stirring cautious optimism in markets.

The Tariff War’s Toll on Business

The current tariff regime has already caused severe disruptions. Matson (MATX), a major freight company, reported a 30% year-over-year decline in container volume since April’s tariff hikes, while the Port of Oregon saw exports plummet 51%. Retailers face lean inventories, with U.S. stores holding just 1–2 months of sales worth of goods—a level that could trigger shortages if imports shrink further.

The ripple effects are global. DHL Global Forwarding CEO Tim Robertson has warned that June 2025 is a “tipping point” for holiday season supply chains, urging companies to lock in shipping capacity now. Meanwhile, maritime fees imposed on Chinese vessels and anti-dumping duties on solar cells from Southeast Asia (targeting Chinese manufacturers) are compounding the pain.

The Case for a Pause

Stein’s optimism stems from the administration’s April 9 executive order, which imposed a 10% tariff on imports from 75 countries except China for 90 days—a move he views as a template for a potential bilateral truce. While the U.S. has excluded China from this pause, Stein argues that extending such a reprieve to Beijing could create space for negotiations.

The economic calculus is clear: both nations are suffering. China’s factory activity has contracted sharply, while U.S. ports like Savannah and Los Angeles report export declines of 12–17%. A pause would buy time to address deeper issues, such as intellectual property disputes and market access, without further destabilizing supply chains.

Matson’s stock, a bellwether for Asia-U.S. trade, has dropped 25% since March 2025, reflecting investor anxiety over tariff impacts. A tariff pause could stabilize or reverse this trend.

Risks and Realities

Don’t mistake hope for certainty. The U.S. and China remain far apart on core issues. China’s State Council Tariff Commission has refused to engage in formal talks, while President Trump insists tariffs will only come down if Beijing concedes first. Even if a pause is agreed, it would likely be short-lived—90 days at most—and fail to resolve the underlying trade war.

Moreover, the administration’s mixed signals complicate matters. While Trump privately acknowledges the “unsustainable” nature of 145% tariffs, he has also threatened to raise them further—suggesting a pause could be conditional on Chinese concessions.

Investing in the Tariff Truce

For investors, the key is to prepare for both scenarios: a temporary pause or a deeper freeze.

Shipping and Logistics: Companies like Matson and DHL (DPWGY) stand to benefit if a pause eases supply chain bottlenecks. A rebound in container volumes would lift their earnings, but the sector remains vulnerable to renewed tariff spikes.
Consumer Staples: Retailers and manufacturers reliant on Chinese imports—such as apparel (e.g., VF Corp, VFC) or electronics—could see cost pressures ease temporarily. However, the broader inflationary impact of tariffs has already begun to hit households, with book prices projected to rise 5–10%.
Energy and Materials: U.S. agricultural exports, like soybeans and corn, have been devastated by China’s 125% tariffs. A pause could provide relief, but farmers should prepare for volatility.
Tech and Semiconductors: The sector faces dual pressures: U.S. curbs on chip exports to China and Beijing’s retaliatory measures. A pause might ease tensions but won’t resolve the tech cold war.

Equity markets reflect the trade war’s toll: the MSCI China Index has underperformed the S&P 500 by 20% since 2023, highlighting the need for sector-specific analysis.

Conclusion: A Fragile Truce, Not a Victory

A 90-day tariff pause is plausible but far from guaranteed. Even if achieved, it would be a stopgap, not a solution. Investors should focus on companies with diversified supply chains, exposure to post-pause demand recovery, and minimal reliance on tariff-affected sectors.

The data is stark: without a pause, U.S. imports from China could drop 80% by mid-2025, per JPMorgan forecasts. That would hit not just multinational firms but also everyday consumers. The council’s advocacy for a truce underscores the high stakes—and the fragility of the current standoff.

In the end, the market’s verdict will depend on whether the pause becomes a stepping stone to broader negotiations or yet another false dawn in the trade war. For now, investors should brace for turbulence—and keep one eye on that 90-day clock.

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