Tit-for-Tat Tariffs Near End? Assessing the US-China Trade Truce and TikTok's Ice-Cold Deal

The U.S.-China trade war has entered a new phase of strategic stalemate, with tariffs now topping 245% on certain goods and non-tariff measures escalating to new heights. Meanwhile, the TikTok divestiture deal, once a flashpoint for national security debates, now sits frozen in diplomatic limbo. Investors must navigate a landscape where tariff reductions and trade truces are contingent on geopolitical give-and-take—and where TikTok’s future hinges on a resolution to the broader economic conflict.

The Tariff Trench Warfare: Costs and Calculations

The Trump administration’s “reciprocal tariffs” have become a blunt instrument in the trade war. While the headline rate on Chinese imports now stands at 245% (combining 10% baseline, 20% fentanyl-related levies, and 125% Section 301 tariffs), exemptions for tech products like iPhones and semiconductors highlight the economic calculus at play. reveal the toll: shares have plummeted 40% since 2023, as Chinese sanctions on Boeing aircraft purchases and supply chain disruptions bite.

China’s retaliation has gone beyond tariffs, deploying export controls on rare earth minerals (critical for U.S. semiconductors) and adding firms like Tommy Hilfiger and Illumina to its “unreliable entity” blacklist. The World Trade Organization’s prediction of a 0.2% decline in global goods trade in 2025 underscores the toll on global supply chains. Logistics firms report a surge in abandoned shipments, with some cargo sold at auctions due to unaffordable duties—a phenomenon analysts call “tariff-driven attrition.”

The TikTok Freeze: A Geopolitical Hostage

The TikTok deal, once a race to meet deadlines, is now a symbol of U.S.-China gridlock. President Trump’s latest 75-day extension pushes the deadline to mid-June but does nothing to resolve the core issue: China’s refusal to negotiate until U.S. tariffs on its exports are reduced.

A near-final deal in April—a spinoff of TikTok’s U.S. operations under American ownership with ByteDance retaining a 20% stake—collapsed after Trump announced a 34% tariff hike on Chinese imports. Beijing’s response was swift: ByteDance was instructed to halt talks until tariffs are addressed, leaving the app’s 170 million U.S. users in limbo.

illustrates the sector’s vulnerability. Tech giants like Apple face dual pressures: reliance on Chinese manufacturing and exposure to retaliatory measures targeting U.S. services.

The Path to a Truce—and Its Investment Implications

Analysts see two potential scenarios:
1. Partial Tariff Rollback: The White House may lower tariffs on non-strategic goods (e.g., consumer electronics) to ease inflation, while maintaining levies on semiconductors and fentanyl precursors. This would stabilize markets but leave strategic industries exposed.
2. Grand Bargain: A broader agreement to reduce tariffs in exchange for Chinese concessions on TikTok, fentanyl, and rare earth exports could unlock a truce. However, Beijing’s insistence on “equal footing” negotiations complicates this path.

Investors should watch three key indicators:
- U.S. Trade Deficit: A narrowing gap (currently $1.04 trillion in goods for 2023) would signal reduced trade tensions.
- Chinese Stock Markets: The Shanghai Composite Index’s performance reflects Beijing’s willingness to compromise.
- TikTok’s Buyer List: Amazon, AppLovin, and Oracle’s interest in acquiring TikTok’s U.S. operations hinges on a deal’s viability.

Conclusion: The Fog of Trade War

The U.S.-China trade conflict remains a zero-sum game, with tariffs and non-tariff barriers now costing $5.5 billion annually for U.S. tech firms alone (per Nvidia’s reported losses). While Trump’s rhetoric suggests a desire to “win,” the economic reality is mutual harm: the WTO forecasts global goods trade to shrink, and the U.S. faces a 2.3% GDP growth ceiling—near recessionary levels.

The TikTok deal, meanwhile, is a microcosm of the larger conflict. Its fate is tied not to data security concerns but to tariff negotiations—a geopolitical hostage until the two sides reach a compromise. Investors should prepare for prolonged volatility, favoring sectors insulated from tariffs (e.g., domestic healthcare) and avoiding companies reliant on China-U.S. supply chains. The truce, when it comes, will likely be partial—and the true winners may be the nations now capitalizing on the decoupling, like Vietnam and India.

In this high-stakes game of tit-for-tat, patience—and diversification—are the only sure strategies.