# US and China Reach Temporary 90-Day Trade Agreement, but Tariff-Related Economic Strain Likely to Escalate

- Link: https://www.thailand-business-news.com/economics/219353-us-and-china-establish-temporary-90-day-trade-agreement-but-tariff-economic-impact-expected-to-intensify-ahead
- Published: 2025-05-21T04:59:00+07:00
- Author: News Desk

The agreement significantly reduces US tariffs on Chinese goods from 145% to 30%,
while China lowers its levies on American imports from 125% to 10%. However, this
easing is largely seen as a temporary pause rather than a definitive resolution,
as fundamental issues between the two powers remain unaddressed.

Key takeaways

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 * The US-China 90-day tariff truce offers short-term relief but fails to resolve
   deeper trade tensions, with broad tariffs still pressuring global growth.
 * The Eurozone faces slowing momentum amid trade threats from the US, prompting
   expectations of continued ECB rate cuts through 2025.
 * China and Thailand are responding to economic stress with policy easing, though
   weak exports and tourism underscore persistent structural challenges.

The agreement slashes US tariffs on Chinese goods from 145% to 30%, while China 
has reduced its levies on American imports from 125% to 10%. Despite this easing,
the truce is widely viewed as a pause rather than a resolution, with structural 
issues between the two powers still unresolved.

While the agreement may temporarily reduce the risk of a U.S. recession and stagflation,
analysts caution that the economic toll of tariffs already in place will likely 
deepen in the months ahead. Broad-based tariffs of at least 10% on all imports remain
in effect, putting pressure on businesses, consumer prices, and investment sentiment.

The Federal Reserve has kept its policy rate steady at 4.25%, 4.50%, citing solid
economic fundamentals and a strong labor market, but is expected to maintain a cautious
stance as it assesses the long-term effects of Trump-era trade policies.

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Across the Atlantic, the Eurozone faces mounting economic headwinds. Growth remains
sluggish, with the manufacturing PMI still in contraction at 49 and services slowing
to 50.1. Inflation remains sticky, with core inflation ticking up to 2.7% in April.

Compounding concerns, the U.S. is considering a fresh wave of tariffs targeting 
nearly EUR 170 billion of EU exports. The European Union has threatened retaliatory
measures worth EUR 100 billion should negotiations fail. 

As the outlook dims, Krungsri Research anticipates the European Central Bank (ECB)
will lower rates from 2.25% to 1.50% by end-2025 to support growth.

Meanwhile, China has stepped up monetary easing to cushion the economy. The central
bank has trimmed the 7-day reverse repo rate and slashed the required reserve ratio,
injecting liquidity into the financial system. 

Despite a steep 21% year-on-year drop in exports to the US in April, China’s rising
exports to ASEAN and potential gains in domestic consumption may partially offset
losses from the U.S. market.

In Thailand, weakening tourism and falling inflation signal a softening economy.
Tourist arrivals fell 7.6% in April, with Chinese visitors plunging nearly 47% year-
on-year. 

Inflation turned negative for the first time in over a year, driven by falling energy
and food prices. These dynamics may give the Thai central bank room to ease policy,
but structural challenges in tourism and global trade remain key risks