Trump makes a breakthrough in the trade with China and stops self -inflicted recession

Trump makes a breakthrough in the trade with China and stops self -inflicted recession

The US economy was on the basis of a recession and a possible catastrophe in the supply chain under President Donald Trump. But at the last second Trump decided to take a step back.

breakthrough in the trade dispute with China

The breakthrough between the USA and China . Target = "_ blank" href = "https://www.cnn.com/2025/12/business/video/us-china-tatreement-gigvid"> 90- day breath in the trade war , which significantly reduces the tariffs that have become burden. This is intended to get trading between the two largest economies in the world.

Hope for a cheap turn

The dramatic decline in US tariffs on goods from China is undeniable progress compared to the past few days. This positive signal has already a Epic Street triggered the hope, the nightmare scenario to avert.

Nevertheless, economists warn that it is still too early to claim that the US economy is completely out of the danger zone. The risks of a recession continue to exist, even if the probability of a downturn has been reduced.

high tariffs and uncertainty remain

The tariffs are still very high - much higher than in the past few decades. The uncertainty is even greater; The trust and trade flows cannot be restored overnight.

In addition, there is no manual for what happens next. There is no precedent for how a modern economy should react after so many shocks in such a short time.

"We are far from being over the mountain," said Douglas Holtz-Ekin, President of the American Action Forum and formerly the Republican business advisor. "There is a story that Trump did a U-Turn. He doesn't have that. We still have tariffs at a level that we have not seen in a century. That is a significant tax increase."

The price for tariffs and Christmas preparations

With 145%, the tariffs of the United States were unbearably high in China and resembled a factual ban on trading. Experts for supply chains warned of upcoming problems, including Empty shelves in the shops .

"This prevents the really catastrophic consequences that the US economy would have taken," commented Erica York, Vice President of the Tax Foundation, to CNN.

York added that the economic team of Trump, which moved away from the 145%tariffs, "shows that the government realizes what kind of catastrophe would have been."

painful adjustments, but ray of hope on the horizon

Although Trump has repeatedly promised hard measures in the past few weeks, he was sensitive to the image of empty shelves and for the reactions of the financial markets to an in -depth trade war, according to a high -ranking government of the government towards Cnn.

"Fortunately, both sides have decided to save Christmas," wrote Peter Boockvar, Chief Investment Officer of the Bleakley Financial Group, in a report on Monday. "The US side listened to the existential crisis of many small companies."

tariffs remain a risk

Despite Trump's decision to reduce the tariffs to China to 30% for at least 90 days, import taxes are still significantly higher than at the beginning of the year. Moody’s Analytics has determined due to the trade framework agreements with China and the United Kingdom It was reduced, which is still the highest level since 1910.

At this level, the tariffs are expected to contribute more than one percentage point to the same time to the same time next year and deduct the same amount from gross domestic product (GDP), said Mark Zandi, chief economist from Moody’s Analytics, compared to CNN.

Outlook: Risks of a recession reduced, but not eliminated

As a result of relaxation in the US China trade war, Zandi lowers his recession forecast-but not dramatic. He now sees a 45%probability for a US recession this year, before that it was 60%.

"The economy will have a difficult year, but should escape a recession," wrote Zandi in an email. "Of course, the economy will be very susceptible to everything else that could go wrong."

In other words, the trade war has reduced the scope for possible mistakes in this economy.

Justin Wolfers, business professor at the Michigan University, noted on X that US trade policy and the economic prospects "are much better today than yesterday". However, it is also true that Wolfers said that the situation is "much worse today than on Inauguration Day."

some uncertainties remain

The Trump 2.0 agenda was so fast and turbulent. After Trump drove the tariffs up on April 2 at the "Day of Liberation", Wolfers warned that the likelihood of recession would increase to 75% if all tariffs were in force and passed.

Now Wolfers CNN announces that the risk of recession is significantly reduced, but is still about 50/50.

"There was a completely unnecessary disorder of the supply chain. You can't undo.

The Chief Economist of Nationwide, Kathy Bostjancic, now sees the US economy slightly positive growth this year, in contrast to its previous prognosis of no growth. Nationwide continues to expect accelerated inflation of 3.4% this year, which is an improvement compared to 4% before the breakthrough in the US China Trade dispute.

tariffs could rise again

Trump himself admitted on Monday that the tariffs in China could continue to rise drastically. When asked whether the tariffs would return to 145% if there was no deal by the end of the 90 days, Trump said: "No, but they would increase considerably." It remains exciting: "I think you will get a deal."

The trade war is not finished

In other words, the trade war between the USA and China is far from over, even if it has improved dramatically. And the tariffs are not simply removed from the President's toolbox.

Specific tariffs on sectors, especially on wood, semiconductor, pharmaceuticals, copper, critical minerals and trucks, are still in the room. Last week the Ministry of Commerce prepared the soil for possible tariffs in the aviation industry by a national security test to imported aircraft, engines and parts.

risk of recession remains

The risk of other tariffs is one reason why the chief economist from RSM, Joe Brusuelas, remains in the forecast of a 55%probability of recession in the next 12 months. "Although the agreement prevented an economic decoupling, which is significant, there are still too many details to clarify, especially in the case of sectors, to take the risk of recession off the table," explained Brusuelas.

economists of Deutsche Bank expressed relief about relaxation in the trade war. "The view for global growth improves," wrote the economists of Deutsche Bank in a report. "American trade policy has developed more conciliatory and there is now a better defined framework for the customs results. The culmination of uncertainty in the trade war has been reached."

trade uncertainty remains high

Of course, the uncertainty had almost no other place where it could go than down. The uncertainty in trade policy, measured by an index that deals with the topic in large US newspapers, has increased to an unprecedented level in recent months.

The sudden decline in US and China tariffs will make financial pressure on the economy easier, but increases the feeling of confusion. It remains to be seen how companies will react to the high level of uncertainty that Wolfers described as "paralized".

"It is clearly a crisis," said Holtz-Ekin, who served as an economic advisor of Senator John McCain during the 2008 presidential election campaign.

Wolfers said that investors and the business world continue to be caught at the next faux pas of customs policy from the White House of Trump. "How high are the chances that we will have 90 days of peace ahead of us?" asked Wolfers. "Today we have good news, but it would be really good news if someone would simply take the button from him."