The trade war between the US and China escalated fast this year. And just as quickly, both sides returned to the table.

Over one weekend in Geneva, top officials from Washington and Beijing met for their first face-to-face negotiations since President Trump raised tariffs on Chinese goods to 145%. China responded with a 125% tax on US imports, bringing nearly $600 billion in trade to a halt.

Now, the same officials are calling the talks productive and speaking of a “total reset.” But what actually happened behind the scenes over the weekend and what will happen next?

Why did the US and China sit down now?

The Geneva talks weren’t planned long in advance. In fact, they only happened because both sides realized the situation had started to spin out of control.

Trump’s “Liberation Day” tariffs in April, which imposed massive duties on dozens of trading partners, were the most aggressive trade policy shift in decades.

While many countries sought exemptions, China retaliated.

The result was a near-collapse in bilateral trade and a growing list of consequences: slowing growth, rising prices, and a real risk of supply chain breakdown.

Pressure came from inside the US too. Retail executives warned that continued tariffs would leave shelves empty by summer. Some compared the situation to the early days of the pandemic.

With US GDP already contracting in the first quarter of 2025, the urgency for damage control was growing.

Goldman Sachs projected core inflation could double to 4% by the end of the year. At that point, talks weren’t just an option. They were a necessity.

What actually got discussed in Geneva?

The official word is that “much was agreed to,” but no detailed joint statement has been released.

Still, the pieces are starting to fall into place.

Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer met with Chinese Vice Premier He Lifeng for nearly 15 hours across two days. Bessent later said the talks were productive.

He also suggested the differences between the two countries may have been smaller than many believed.

Tariffs were the central focus. Trump floated the idea of reducing duties on Chinese imports to 80%, a significant drop from 145%, but still high enough to keep pressure on Beijing.

China has not officially confirmed whether it will reduce its 125% tariffs. But both sides now admit that continued escalation could severely harm their economies.

There were also broader issues on the table. The US pushed for more access to China’s consumer market and tighter controls on the export of fentanyl precursors.

China, meanwhile, sought clarity on what exactly the US wanted and continued to reject calls for structural reforms.

Ultimately, the negotiations did not resolve these long-standing disputes, but they did establish a new channel for dialogue.

Could this be the end of the trade war?

Not yet. The tariffs remain in place, and no final deal has been announced. Still, the tone has changed.

The US called the talks a “reset.” China, through state media, called the meeting a necessary step toward avoiding further escalation.

That seems pretty significant, considering that the previous round of talks in 2020 ended in a paper deal that quickly fell apart. This time, the urgency is real and the stakes are higher.

One major difference is that the costs are no longer theoretical. Chinese exports to the US dropped 21% in April, while factory output slowed to its weakest level in over a year.

On the US side, imports from China are expected to fall by 75 to 80% in the second half of 2025.

The National Retail Federation expects overall import traffic to decline for the first time since 2023. These aren’t distant projections but live indicators of stress in both economies.

If anything, this gives both sides incentive to move toward a staged rollback.

Economists believe even cutting tariffs to 80% would still leave the US with one of the highest effective import tax rates in modern history. But it would be a start.

Why does this matter beyond tariffs?

This trade dispute is no longer just about trade.

Trump has tied the tariffs to other issues, like fentanyl trafficking and industrial policy. China sees this as part of a larger attempt to limit its rise.

That’s why any deal will likely go beyond product-level negotiations. At its core, this is about the balance of economic power and influence.

But it’s also about global risk.

The World Trade Organization has already downgraded its 2025 merchandise trade forecast to negative 0.2%, a full three percentage points below pre-war expectations.

The IMF followed with a cut to global growth projections, warning that division into economic blocs could push the world closer to long-term stagnation.

A trade freeze between the US and China is not just their problem. It’s everyone’s.

What to watch next

On Monday, the US is expected to release details from the Geneva talks, potentially outlining a phased plan to reduce tariffs.

This may include sector-specific relief, such as temporary suspensions on electronics, agriculture, or pharmaceuticals, as well as early benchmarks tied to Chinese market access or fentanyl enforcement.

Officials have hinted at continued momentum, and a direct call between Trump and Xi Jinping could follow if this framework holds.

For now, however, the 145% and 125% tariffs remain in place, and businesses will continue to face high costs, re-routing supply chains, and pricing pressure as they wait for clarity.

Looking ahead, there are three plausible directions.

A full-scale rollback to the 20% range could emerge if both sides agree on mutual enforcement and measurable outcomes, though that’s optimistic.

A second outcome is gridlock: talks stall, tariffs stay, and the economic fallout continues.

But the most likely scenario is a limited deal where China makes concessions on fentanyl and opens a few sectors, while tariffs remain elevated as a negotiating tool.

This lets both governments claim success without solving the deeper structural divide. Whatever the case, this reset will only matter if it leads to sustained, enforceable change, and not just headlines.

But for now, the tariffs stay. But so does the conversation.

And in a trade war with no winners, that’s more progress than most expected.

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Oil prices are not likely to recover much as a significant surplus is looming on the market, according to analysts. 

Brent crude oil prices fell below $60 at the beginning of last week following OPEC+’s announcement of a substantial production increase for June. 

This development will be incorporated into upcoming forecasts from OPEC and the International Energy Agency (IEA) in the next week. 

The US Energy Information Administration’s May forecasts did not yet reflect these changes due to their recent announcement.

Demand concerns

“Albeit OPEC+ and US government policy announcements have been the catalysts for April and early May price declines, there are clearly worrisome indications in fundamental oil market data,” David Wech, chief economist at Vortexa, said. 

So far this year, demand indicators for conventional liquid oil have been concerning, according to Wech. 

Each month has shown a year-on-year decrease in seaborne crude and motor fuel arrivals, Vortexa data showed.

Liquids arrivals, excluding LPG+, have averaged 1.8 million barrels per day less in recent months compared to January-April 2024, the data showed. 

April’s figures, along with three- and four-month moving averages, represent the lowest levels observed since February 2021.

Wech added:

Lower crude arrivals are not necessarily a surprise as mature refining hubs in Asia or Europe are experiencing declines in implied refining runs, as poor demand combined with high product exports from the Middle East and India are weighing on margins.

As a result, Asian and European refiners are importing more finished motor fuels and less crude oil. 

This trend further complicates the understanding of the global decrease in gasoline, jet fuel, and diesel trade volumes.

Increased availability and robust demand in power generation are driving simultaneous price increases for both LNG and LPG, Wech said. 

Consequently, these gases directly, and even more significantly indirectly, compete with liquid fuels like oil.

How much will OPEC+ add to the market?

The IEA previously noted that the reported increase in OPEC+ oil production appears larger than reality because some countries are already exceeding their planned output.

“Nevertheless, it is now likely to predict a higher oversupply, as the outlook for global oil demand is unlikely to have improved,” Barbara Lambrecht, commodity analyst at Commerzbank AG, said. 

Voluntary export curtailments by eight countries within OPEC+ since December 2022 have been less significant than their announced production cuts implied.

The eight members, which include Saudi Arabia and Russia, had been adhering to voluntary output cuts of 2.2 million barrels per day since early 2024.

The members have started unwinding these cuts from April, with large increases of 411,000 barrels a day scheduled for May and June. 

The decision to accelerate the return of barrels may stem from this observation. 

Notably, by June, the combined production targets for the eight nations are set to increase by 959,000 barrels per day compared to March, according to Vortexa.

Following the announcement, oil prices declined sharply last week, particularly due to widely acknowledged challenging market fundamentals. 

Notably, crude oil within the supply chain, held in storage tanks and tankers, has accumulated significantly, increasing by over 150 million barrels since mid-February, Vortexa data showed.

“Significant extra supplies would be likely to move stocks above that crucial benchmark over the next couple of months,” Wech said. 

Kazakhstan continues to overproduce

Kazakhstan’s oil production remains considerably above agreed levels, and the country seemingly intends to maintain this output in May.

Kazakhstan’s Energy Ministry projects that its daily oil and condensate production will remain steady at 277,000 tons in May, matching April’s output.

In March, production amounted to 260,000 tons per day.

The production reported for April and May corresponds to a good 2 million barrels per day, according to Commerzbank. 

The German bank said condensate production is approximately 260,000 barrels per day, suggesting a crude oil production of around 1.75 million barrels per day in Kazakhstan.

“The ceiling agreed for May would therefore be exceeded by around 300 thousand barrels per day if the compensatory cuts are not taken into account,” Carsten Fritsch, commodity analyst at Commerzbank, said in the report. 

This increases the risk that Saudi Arabia will also push for a strong increase in oil production in July.

The downside risks for oil prices are therefore increasing further.

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Over the past year, more than $1 billion in Venezuelan oil shipments to China has been relabeled as Brazilian crude by traders, according to tanker tracking firms, company documents, and traders quoted by Reuters. 

This practice allows buyers to lower logistics expenses and avoid US sanctions.

Chinese independent refiners primarily purchase seaborne oil from US-sanctioned nations, with offshore Malaysia acting as a major trans-shipment point for Venezuelan and Iranian crude.

Traders have increasingly relabeled Venezuelan oil shipments to China as Brazilian crude since July 2024. 

Trans-shipping

This practice, which follows a prior method of trans-shipping Venezuelan and Iranian oil through offshore Malaysia, allows tankers to travel directly from Venezuela to China. 

By eliminating the Malaysian stop-over, the voyage is shortened by approximately four days. This re-branding initiative is a response to US sanctions on Venezuelan energy exports.

The US imposed these sanctions in 2019 to diminish the oil export revenue that supports the Venezuelan government of President Nicolas Maduro. 

Maduro has maintained power for over a decade through elections deemed fraudulent by observers. The sanctions are intended to pressure Maduro’s regime by restricting its primary source of income.

However, Maduro and his government have strongly condemned these sanctions. 

They characterise them as illegitimate actions amounting to an “economic war” designed to destabilize Venezuela. 

Despite the sanctions, practices like relabeling oil shipments indicate efforts to continue oil trade and circumvent the intended impact of the US measures.

Circumventing sanctions

To circumvent sanctions, oil traders have been transferring Venezuelan crude between ships at sea to conceal its origin before shipping it to China, the largest global crude importer. 

More recently, shippers have also been manipulating tankers’ location signals, a practice known as spoofing. 

This makes it appear as though vessels are departing from Brazilian ports when they are actually sailing from Venezuela. 

This manipulation has been confirmed by maritime data, satellite imagery, and shoreside photos collected and analysed by TankerTrackers.com.

Bitumen mask

Between July 2024 and March 2025, China imported approximately 2.7 million metric tons (67,000 barrels per day) of mixed bitumen from Brazil, according to Chinese customs data. The total value of these imports reached $1.2 billion.

Petrobras indicates that while Chinese refiners are regular buyers of Brazilian crude oil, Brazil typically does not export bitumen blend. 

Brazilian customs records confirm this, showing no bitumen blend exports to China since at least 2023.

Mixed bitumen, a tar-like residue destined for asphalt production, is distinct from Brazil’s primary crude oil exports. These exports are typically medium-sweet oil sourced from the extensive pre-salt offshore fields.

Petrobras CEO Magda Chambriard was quoted in the report by Reuters:

What we export to China is mainly crude oil from the pre-salt, it’s not bitumen.

Trading sources, tanker tracker Vortexa Analytics, and internal PDVSA documents indicated that many crude cargoes entering China labeled as Brazilian bitumen are, in fact, Venezuela’s Merey. 

This flagship heavy crude is typically purchased by China’s independent refiners from Venezuela’s state-run PDVSA through intermediaries.

Chinese traders report that Merey crude is often referred to as a bitumen blend by traders. This is because its tar-like consistency allows refiners to import it without requiring government crude oil import quotas.

Cost effective

According to a trader involved in Venezuelan oil, labeling cargoes as Brazilian not only reduces travel time and ship-to-ship transfer expenses but also facilitates securing bank financing. This practice is common among regular dealers.

The trader was quoted in the report:

The savings on the freight front are not much, but it helps securing financing, relieving traders’ financing pressure throughout the two-month-long voyages.

China consistently voices its opposition to unilateral sanctions, a stance shared by Venezuela. 

Notably, China serves as the primary recipient of Venezuela’s crude oil exports. 

In the past year, Venezuela’s oil and heavy fuel shipments to China averaged around 351,000 barrels per day (bpd). 

This volume saw an increase in the initial four months of 2025, reaching 463,000 bpd, as indicated by PDVSA records and shipping information gathered by Reuters.

Despite traders’ claims, less than 10% of China’s Venezuelan oil imports are officially reported as such. The majority continues to be declared as Malaysian crude or mixed bitumen.

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President Donald Trump announced on Sunday evening that he would sign an executive order aimed at reducing prescription drug prices in the United States by linking them to prices paid in other wealthy nations.

The move, posted on Truth Social, revived a controversial pricing model known as the “most favored nation” (MFN) approach.

The plan would effectively cap US prices for certain drugs at the lowest rate paid by peer countries.

Trump offered few details on which drugs or insurance programs would be affected, leaving critical questions about implementation unanswered.

“Our Country will finally be treated fairly, and our citizens Healthcare Costs will be reduced by numbers never even thought of before,” he wrote.

While the order does not immediately change federal policy, it signals a renewed effort to address soaring drug costs ahead of the election season, with potential implications for pharmaceutical firms worldwide.

From Chugai to Sun Pharma: Asian pharma stocks fall sharply in response

Markets in Asia were among the first to react, with pharmaceutical shares plunging on Monday amid fears that reduced prices in the US—the world’s largest market for medicines—could significantly dent profits.

In Japan, the drug sector was the weakest performer on the Topix index.

Chugai Pharmaceutical fell as much as 10%, marking its sharpest drop in over a year. Daiichi Sankyo lost 7.8%, and Takeda Pharmaceutical fell over 5%.

In Hong Kong, BeiGene Ltd. dropped 8.8%, while Innovent Biologics shed 6.4%.

South Korean firms SK Biopharmaceuticals, Celltrion, and Samsung Biologics each fell more than 3%.

Indian drugmakers Sun Pharmaceutical, Lupin, and Aurobindo Pharma posted declines between 3% and 7%.

The market rout reflected concern that a pricing overhaul in the US could erode revenue for companies that rely heavily on American sales.

Rule likely to apply to Medicare drugs; analysts flag challenges to implementation

The White House has yet to provide full details of the executive order. According to a report by Politico, the MFN pricing principle would initially apply only to a selection of Medicare-covered drugs.

Stephen Barker of Jefferies Japan pointed out that Trump’s latest initiative mirrors an earlier proposal to cap Medicare drug prices—a move struck down in federal court after pushback from pharmaceutical companies.

Nonetheless, Barker warned that a renewed push targeting Medicare and Medicaid, which together account for roughly 40% of US drug sales, could result in serious revenue reductions across the sector.

Shares of Japan’s Astellas Pharma and Otsuka Holdings, both of which derive significant revenue from US operations, lost more than 4% following the news.

Hidemaru Yamaguchi of Citigroup Global Markets Japan described the plan’s feasibility as “questionable,” but noted that its mere announcement had already shaken investor sentiment.

“The devil still may be in the details,” said Michael Risinger, a healthcare strategist. “We’ll have to see whatever that detailed plan is… and then watch future developments.”

Evan Seigerman of BMO Capital Markets emphasized that the executive order would likely be confined to the Inflation Reduction Act framework introduced under President Biden, which already mandates price negotiations for a small number of high-cost drugs.

Seigerman added that the federal government currently lacks authority to set prices in the commercial market, and any attempt to broaden the order’s reach could face strong opposition in the Republican-controlled House.

Still, the uncertainty surrounding the order is adding volatility to global pharma stocks.

S&P 500 Pharma industry index down by 10% over 3 months

The extent of pricing pressure and potential tariffs remains unclear, but the prevailing uncertainty is already dragging down pharmaceutical stocks in the US as well.

The S&P 500 Pharmaceuticals industry index has declined nearly 10% over the past three months, and analysts caution that it may be too early to declare a bottom for the sector.

The US pharmaceutical market is a cornerstone of global drug revenues.

Seven of the ten largest pharmaceutical firms by market value are American, and even foreign giants like Novartis, Sanofi, and Novo Nordisk derive more than half their income from US sales.

Eli Lilly, the world’s most valuable drugmaker, earned 67% of its 2024 revenue from the US Johnson & Johnson, the largest by revenue, earned 57%.

Industry executives have warned that pricing cuts could jeopardize research and development, already an expensive and risky process.

Around 90% of drugs entering Phase 1 clinical trials never reach the market, and development timelines can stretch up to 15 years.

In a Barron’s report, an Eli Lilly spokesperson called the MFN model “a misguided attempt at addressing drug prices that would do nothing for patients while jeopardizing the nearly $200 billion in new US investments recently announced by biopharmaceutical companies.”

Calls for global responsibility and balanced policy

Chris Boerner, CEO of Bristol Myers Squibb, expressed concern that unilateral US pricing reforms could undermine global R&D investment.

In an op-ed for STAT, he urged other wealthy nations to increase their contributions to healthcare innovation rather than depend disproportionately on US spending.

“Slashing US investment in medicines or importing lackluster policies of less innovative health care systems is not the answer,” Boerner wrote.

For now, the global pharmaceutical industry faces a renewed test of its pricing power in its most profitable market, with investors bracing for continued volatility in the months ahead.

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