As both sides near an agreement, the key question is: what will this mean for global trade

After a surprising but welcome turn of events, the United States and China have returned to the negotiating table, signalling a potential de-escalation in what has been one of the most disruptive trade conflicts in recent memory. Over the weekend, senior economic officials from both nations convened in Geneva for two days of intensive discussions that, according to US Treasury Secretary Scott Bessent, led to “substantial progress” in defusing tensions. While the specifics of the agreement reached remain under wraps until a formal announcement expected shortly, what is clear is that both sides are showing a newfound willingness to cooperate — driven less by ideology and more by pragmatic necessity. The most notable development is the apparent softening of President Donald Trump’s position. Once known for his combative rhetoric and sweeping tariffs, Trump struck a markedly more conciliatory tone following the talks. “A total reset... in a friendly, but constructive, manner,” he said on Social media. “We want to see, for the good of both China and the US, an opening up of China to American business. GREAT PROGRESS MADE!!!”

This shift likely stems from both economic and political calculations. With a $1.2 trillion global goods trade deficit, the US is under pressure to restore trade flows and lower consumer prices. Moreover, recent agreements with the UK and other allies suggest a broader strategy of re-engagement in global commerce, moving away from isolationist tendencies.

China, for its part, entered the negotiations with steely resolve. Vice Premier He Lifeng and his delegation were described by US Trade Representative Jamieson Greer as “tough negotiators”, but also as partners who were serious about rebalancing trade relations. Behind closed doors, China’s posture was firm yet forward-looking — a sign that Beijing recognises the economic and diplomatic cost of prolonged decoupling. White House economic adviser Kevin Hassett described China as “very, very eager” to reset ties with the US, echoing sentiments of urgency from Chinese officials facing their own domestic pressures, including slowing growth and the need for greater access to Western markets and technology. The past few years of tit-for-tat tariffs — some exceeding 100 per cent — have left deep scars on both economies. American farmers, Chinese exporters, multinational corporations, and global consumers have all borne the brunt of the trade war’s fallout. Global supply chains have been distorted, inflationary pressures have mounted, and investment flows have become increasingly cautious. Both sides now seem to agree that continued disruption is untenable. In fact, Greer’s acknowledgment that “perhaps the differences were not so large as maybe thought” suggests that the path to resolution may have always been more about political will than substantive divergence. He has categorically said that most tariffs are likely to be rolled back giving a clear indication that the trade war is coming to an end.

The implications of renewed US–China trade cooperation are far-reaching. A thaw could restore stability to global markets, re-anchor supply chains, and reduce the risk of further economic fragmentation at a time when multilateralism is already under strain. It also reinforces the idea that no economy, however large, can truly go it alone in an interconnected world. While the devil will be in the details — especially around tariff rollbacks and market access — the decision to engage meaningfully is a victory in itself.

With formal announcements pending and the potential for additional trade deals on the horizon, the global community will be watching closely. What began as a combative trade war may now be evolving into a phase of recalibrated engagement — tempered by realism, shaped by necessity, and driven by mutual benefit. As the United States and China edge closer to a trade détente, India finds itself at a crucial geopolitical and economic juncture. Over the past few years, India has benefited from the US–China trade rift, attracting supply chains, investment, and diplomatic goodwill.  But a rapprochement between Washington and Beijing could shift the dynamics once again — presenting both challenges and opportunities for New Delhi.

One immediate impact of a US–China agreement would be the fading of the so-called “tariff dividend” that India and other emerging markets enjoyed as global manufacturers sought to reduce dependence on China. With tariffs potentially rolling back, US companies might reconsider reshoring or nearshoring supply chains that had begun migrating to Vietnam, India, and Southeast Asia. While India has made efforts to position itself as an alternative to China — through production-linked incentives (PLIs), infrastructure upgrades, and “Make in India” campaigns — the ease, speed, and scale of doing business in China is still way ahead. If Beijing can secure favourable terms with the US, it could regain lost ground in global manufacturing. In the end, the world’s two largest economies do not have to be friends — but they must be partners. And now we have clearest sign that both Washington and Beijing understand this truth.