US President Trump’s trade truce with China may be a double-edged sword. While lower tariffs will save American companies like Cocoon USA $30,000 in tariff costs, it also raises concerns about China’s trading power.
The deal reduces the average effective tariff on Chinese goods to 20.2 percentage points, compared to 17.3 for other countries. However, some economists argue that this is not enough to discourage US companies from relying on Chinese suppliers.
“Ten percent isn’t quite enough to move the needle,” said Cameron Johnson, a supply chain consultant in Shanghai. Many American companies are still hesitant to diversify their supply chains due to concerns about China’s reliability and unpredictability.
The deal may also limit the incentive for companies to relocate to other countries like India and Vietnam. According to Sean Stein, president of the US-China Business Council, “In no place has it been possible to replicate the manufacturing ecosystem and cost efficiencies that you get in China.”
However, smaller American companies may benefit from the truce, as it reduces their reliance on Chinese factories for highly technical work.
As the trade relationship between the US and China continues to evolve, one thing is certain: the future of global supply chains will be shaped by this delicate balance.
Source: https://www.nytimes.com/2025/11/02/business/economy/trump-tariff-deal-china.html