The world’s two largest economies have long been a cornerstone of global commerce. When tensions escalated into a trade war in 2018, tariffs were imposed. Supply chains were disrupted and global markets were shaken. In January 2020 as the U.S and China signed a historic first trade agreement that promised to de-escalate the year’s tension. The agreement included commitments from China to increase its purchases from U.S goods and services by $200 billion over two years and address structural issues in China’s economy.

The U.S.–China deal may have calmed the surface, but deeper currents continue to reshape the global economy.

This agreement included commitments such as foreign exchange, financial services, and technology transfer. In the challenging phase of the COVID-19 pandemic, China could not fulfill the commitments of purchasing U.S goods over $200 billion and hardly reached 57% of its target at the end of 2020. While the trade deal had some impact on global trade flows and supply chains, according to the WTO, the effects on the economy were slight.

The central goal of the trade deal was to reduce the U.S trade deficit with China, yet this objective remains unmet. According to the U.S, the trade deficit with China shrank during the high tariffs in 2019. The U.S imposed 25% tariffs on china’s some Chinese products by mid-year and an additional 10% on others, and China also imposed 25% tariffs on U.S goods. Meanwhile, the conflict introduced protectionist ideas into the mainstream. Countries, including India, and members of the EU, introduced their tariffs. The U.S.-China trade deal marked a turning point in the architecture of global trade. The U.S.-China deal may have calmed the surface, but it deeper currents continue to reshape the global economy.

A second U.S.-China trade deal of 2025 is significant to address the structural issues and implement the first agreement provisions. A second deal could address and resolve the issues, such as the economic model, property protection, and forced technology transfer, which were not fully addressed in the first agreement. A new U.S.-China trade agreement was signed that brought temporary relief to the global economy. Both nations agreed to reduce tariffs.

U.S tariffs on Chinese goods were lowered from 145% to 30% while China reduced tariffs on U.S imports from 125% to 10%.stock markets across the U.S, Europe, and Asia rallied in response, and companies began to re-engage in cross-border trade more freely. The agreement also slightly improved China’s 2025 GDP forecast, and global shipping volume began to rise again.

One of the most significant effects of the China trade deal has been on global supply chains, which were already under stress due to high tariffs and geopolitical tensions. If the deal includes tariff reduction on key goods, it could lower costs for businesses and consumers, potentially stabilizing supply chains and encouraging trade. Agreements to ease restrictions on rare earth minerals could stabilize supply chains for industries on these materials, such as electronics and renewable energy. If a deal includes new or increased tariffs, it could lead to higher costs for businesses and consumers.

Countries such as Vietnam, Mexico, and India experienced a healthy profit as companies moved manufacturing out of China.

The trade deal could lead to increased geopolitical tensions and more disruptions to global trade. As the U.S and China signed their bilateral agreement, many other countries found themselves on the sidelines. Raising concerns about the erosion of multilateral trade norms. The deal showed a shift away from global cooperation, prioritizing national interest over international agreements. These are seen by institutions like the WTO. In response, several nations began pursuing alternative trade alliances such as, Regional Comprehensive Economic Partnership in Asia.

EU has moved towards strategic autonomy in trade, aiming to reduce dependence on both the U.S and China. The U.S.-China trade deal had a great impact on emerging market countries that are still growing and emerging their markets. Economies such as Vietnam, Mexico, and India experienced a healthy profit as many of the countries have moved their manufacturing out of China to reduce future risks. On the other hand, some emerging economies have been affected negatively.

Countries such as Thailand and Malaysia, initially appeared to be advantageous, are now facing tough competition from cheaper Chinese goods that are being exported through other routes to avoid US tariffs. These countries have also come under pressure from the U.S for helping China bypass trade restrictions. Nations that depend on exporting raw material to China are facing low demand due to the changing trade policies and the slowing of China’s economy.

The trade tensions and agreement between China and the U.S have significantly affected the global economy. These issues have disrupted worldwide supply chains, weakened international trade, and created both opportunities and hardships for growing nations. Some countries have benefited from shifts in trade and investments, while others have struggled with high tariffs and increased competition.

The trade deal could lead to increased geopolitical tensions and more disruptions to global trade.

These ongoing tensions show that global trade is becoming less expected and more politically dominant. This difficult time period could lead to a balanced and durable economy. However, the deal is still seen as a temporary fix. Long-term challenges such as disagreements over technology, supply chain security, and intellectual property remain unresolved.

Disclaimer: The opinions expressed in this article are solely those of the author. They do not represent the views, beliefs, or policies of the Stratheia.