Will the US–China Trade War End Soon? Latest Insights and Predictions

The U.S.–China trade war, initiated in 2018 with escalating tariffs, quickly evolved from a dispute over trade balances to a deep strategic competition encompassing technology and national security. This multifaceted conflict, marked by tariff hikes and counter-hikes, export controls, and supply chain restructuring, represents one of the most significant geopolitical and economic shifts of the modern era.

Recent developments have introduced a volatile mix of renewed tension and guarded diplomatic communication. While high-level meetings suggest a mutual desire to manage the fallout, aggressive rhetoric and tit-for-tat actions—such as the U.S. raising tariffs on specific Chinese goods and China tightening export controls on critical materials—underscore the persistent, deep-seated strategic rivalry. This article analyzes the current signals, the political and economic forces at play, the prospects for a lasting trade agreement, key expert predictions, and the potential global market impact of the trade war ending.

What Are the Current Signs That the US–China Trade War Might End?

The most recent data and commentary suggest a pattern of volatility rather than clear de-escalation, but diplomatic channels remain open.

• Renewed Tensions: The period leading up to the end of 2025 has been characterized by sharp escalation. The U.S. has threatened additional, significant tariffs (e.g., 100% on Chinese exports) and new controls on critical software, primarily in response to China's expansion of export controls on rare-earth materials and related technologies. Furthermore, both countries have recently implemented new port fees on cargo ships, widening the conflict beyond traditional goods tariffs.

• Diplomatic Lifelines: Despite the fiery rhetoric, both sides maintain "working level" and high-level diplomatic contact. China’s Commerce Ministry has stated, "If you wish to fight, we shall fight to the end; if you wish to negotiate, our door remains open." This suggests that even amid tariff threats and retaliatory measures, neither party has fully severed the dialogue, indicating that de-escalation, while not imminent, remains a strategic option.

• Credibility of Signals: The current signals appear to be tactical posturing rather than real progress toward a resolution. The threats of enormous new tariffs and controls on rare earths—a critical input for U.S. high-tech and defense industries—raise the economic stakes considerably. In past trade conflicts, such aggressive moves were often negotiating leverage, but the current focus on national security and critical technologies makes the conflict's core far more structural and less amenable to a simple trade deal fix.

How Do Political and Economic Factors Affect the End of the Trade War?

The trajectory of the trade conflict is inseparable from the domestic politics and macroeconomic conditions of both nations.

U.S. Domestic Politics and Timing

The U.S. domestic politics—particularly the upcoming election cycles—significantly influence trade policy.

• Electoral Influence: Tariffs have become a key platform, with some politicians viewing them as an effective tool to counter what the U.S. labels as China's unfair trade practices (e.g., intellectual property theft, forced technology transfer). This political consensus for a tough stance complicates any major de-escalation, as a perceived "soft" deal could be politically damaging.

• Congressional Debate: Congress and the Executive Branch continually debate the efficacy of tariffs, weighing their economic costs (passed on to consumers and businesses) against their strategic benefits of pressuring China. The use of legislation, like Section 301, provides a legal framework for tariffs, making them difficult to quickly unwind.

China's Internal Economic Priorities

China's internal priorities are a major factor in its response strategy.

• Export Resilience: Despite U.S. tariffs, China's overall global exports have shown resilience, with robust growth in shipments to ASEAN, Europe, Latin America, and Africa. This success in diversifying markets makes the economic pain from U.S. tariffs less immediately devastating than initially predicted.

• Domestic Focus and Geopolitical Goals: Beijing is focused on domestic economic stimulus and moving up the value chain (e.g., in semiconductors, EVs, and ships). Its rare-earth export controls demonstrate a willingness to use its supply chain dominance as a geopolitical tool, prioritizing strategic trade-offs and national security over immediate export revenue from the U.S.

Macroeconomic Pressures

Macroeconomic pressures—like global supply chain stress, inflation, and a general global slowdown—provide a powerful incentive for both nations to seek stability. Tariffs increase costs for producers who use Chinese components (a large share of global intermediate goods) and for consumers. While some U.S. officials argue the overall economic impact has been muted, the drag on specific industries and the ongoing price pressure contribute to the incentive for trade negotiations between US and China. However, the focus on geopolitical strategies and supply chain security often outweighs these immediate economic concerns.

Can Future Negotiations Lead to a Long-Term US–China Trade Agreement?

A long-term US–China trade agreement faces significant structural challenges because the conflict has transcended trade and become a competition over economic leadership and national security.

• Potential Compromise: A sustainable agreement would likely require a phased approach. Initial, politically-palatable compromises could include:

  • Tariff structures: Reciprocal, temporary pauses on select non-strategic goods.

  • Market access: China providing greater access for U.S. services and certain agricultural goods.

  • Cooperation: Mutual, guarded agreements on transnational issues like fentanyl trafficking and climate change.

• Non-Negotiable Red Lines: The main hurdles are the non-negotiable red lines, particularly in the technology and security spheres.

  • Intellectual Property (IP) and Forced Technology Transfer: The U.S. insists on verifiable structural changes to Chinese industrial policy, which Beijing views as sovereign matters.

  • Tech Export Controls and Decoupling: The U.S. will likely maintain and even increase restrictions on China's access to advanced technologies, especially semiconductors and AI software, due to security concerns. China views this as an attempt to stifle its economic development, making it highly resistant to any comprehensive deal without easing these curbs.

• Stability Challenge: The risk of instability is high. Future leadership changes in either country could easily see new administrations abandoning prior agreements. Furthermore, the role of third parties (like the WTO, EU, or ASEAN) is limited to mitigating the global spillover but not directly mediating a deal, as the conflict is fundamentally bilateral.

What Do Experts Predict About the Resolution of the Trade Conflict?

US China trade war predictions from leading economists and analysts primarily point toward a prolonged state of managed conflict rather than a clean, swift resolution.

• Scenario 1: Gradual Thawing (Low Probability): This optimistic scenario involves both sides recognizing the high economic cost and agreeing to roll back tariffs significantly on non-strategic goods while maintaining a "firewall" around critical technology. Goldman Sachs economists, for instance, have suggested China's recent aggressive moves (like rare-earth curbs) could be a tactic to force the U.S. to lower tariffs, leading to a market-positive outcome.

• Scenario 2: Prolonged Conflict/Phased Agreements (Base Case): The consensus among think-tanks and policy forecasters is that the conflict will persist through a series of tactical engagements. Tariffs will remain a permanent fixture of bilateral trade, perhaps fluctuating between 30% and 60% on average, rather than returning to pre-2018 levels. Resolution will be sector-specific and partial, focusing on strategic competition in tech and finance rather than full trade normalization. This outcome is heavily influenced by the persistence of domestic politics driving a tough-on-China stance.

• Scenario 3: Full Decoupling/Escalation (Tail Risk): Should the U.S. impose 100% tariffs and China retaliate with a full ban on rare-earth exports, Bloomberg Economics estimates that the effective tariff rate would be so high as to "shut down trade," leading to severe global disruption. This scenario is considered a tail risk, as both economies would suffer substantial, unmanageable damage.

Ultimately, while the desire to stabilize the relationship exists, experts stress that the unpredictability of U.S.–China relations—driven by domestic political incentives and national security strategies—makes any long-term forecast highly uncertain.

How Would Ending the Trade War Impact Global Markets and Businesses?

The end of the trade war, or even a substantial de-escalation, would have profound and multifaceted effects on the global economy.

Short-Term Effects

In the immediate aftermath of a significant agreement, markets would experience short-term relief.

• Market Relief and Sentiment: Stock markets would likely rebound globally, particularly in sectors heavily impacted by tariffs (e.g., technology, manufacturing). Improved investor sentiment would signal stability, reducing the risk premium currently embedded in global assets.

• Revived Trade Flows: A tariff rollback would lead to an immediate revival of U.S.–China trade flows, easing price pressures for goods and capital inputs. This would be a minor deflationary force, as the tariffs’ cost has contributed to global inflation.

Long-Term Structural Impacts

The global market impact of trade war de-escalation would not fully reverse the structural changes already in motion.

• Supply Chain Resilience: The trade war has already spurred the long-term trend of "China Plus One" and "friend-shoring," where multinational corporations diversify manufacturing hubs away from China (or at least concentrate non-critical manufacturing there). This trend is unlikely to be fully reversed.

• Winners and Losers:

  • Winners: U.S. consumers (lower prices), U.S. agriculture (resumed exports), global commodity markets (higher demand), and specific industries that rely on low-cost Chinese inputs.

  • Losers: Countries in Southeast Asia, Mexico, and Vietnam that benefited from trade diversion as companies shifted production to avoid tariffs.

  • Semiconductors and Tech: Restrictions in the tech sector, driven by national security, are expected to remain in place, limiting a full return to pre-war tech integration.

The trade war's eventual outcome will define the future of globalization. A prolonged conflict reinforces economic blocs and strategic decoupling, while a managed resolution, however difficult, could provide a more stable, albeit more regulated, architecture for world economic stability. Global firms and policymakers must remain adaptive to this volatile trade landscape, planning for a world where economic and strategic competition are deeply intertwined.

The complexity of the current U.S.–China dynamic—balancing aggressive tariff threats with open diplomatic channels—underscores that while a quick, comprehensive resolution to the US–China trade war end soon is unlikely, a continued management of the conflict is the most probable path.

A video discussing the implications of the trade war and tariff increases for the US economy can provide further context on the latest insights. Latest U.S.–China Trade War News