In a landscape of breathless market euphoria, Richard Coffin offers a necessary cold shower: the so-called "total reset" in US-China trade relations is less a new dawn and more a tactical retreat to a precarious stalemate. While headlines celebrate a 90-day tariff pause, Coffin's analysis reveals that the effective tax burden on trade remains at historic highs, with critical sectors still facing prohibitive barriers that threaten to stifle growth rather than spark it.
The Illusion of a Reset
Coffin immediately dismantles the celebratory narrative surrounding the recent Geneva meeting. He notes that while the White House described the outcome as a "total reset in US Chinese relations," the reality is far more mundane. "As much as I hate being a party pooper, not really," Coffin writes, pointing out that the agreement essentially "walking back of the US-led escalation of the trade war back to essentially whatever tariffs both countries had pre liberation day plus 10%." This framing is crucial because it shifts the focus from diplomatic triumph to the mechanics of policy rollback. The markets, however, are reacting to the headline numbers rather than the underlying complexity. Coffin observes that "stocks rising to be roughly flat year to date probably gives the impression that uh the worst is behind us," but he warns that this optimism may be misplaced given the structural friction that remains.
The core of the argument rests on the distinction between advertised rates and effective rates. While the new baseline is a manageable 10% to 30%, Coffin argues that "the real effective tariff rates in both countries are currently still higher with certain key products and industries still facing higher tariffs than many are being led to believe." This is a vital nuance for investors who might assume the trade war is effectively over. The administration has maintained legacy levies, including Section 232 tariffs on steel and aluminum, and Section 301 tariffs on specific Chinese goods like solar cells, which still face an additional 50% duty. "So in that case we still have a very high tariff rate of 80% and there are many other product categories that will face higher effective rates than that advertised 30%," Coffin explains. This layering of tariffs creates a complex web that a simple "90-day pause" headline fails to capture.
30% is still a very high tariff rate for America's third largest trading partner... it still brings the average US tariff rate to around 18%. The highest level it's been in 90 years.
Critics might argue that a 90-day pause is a necessary breathing room to negotiate a more permanent solution, and that any reduction from triple-digit tariffs is a victory in itself. However, Coffin suggests that even these "lower" rates are sufficient to disrupt supply chains, noting that "US exports of liqufied natural gas to China have already ground to a halt since February." This indicates that the economic damage is not just theoretical but is actively occurring in real-time, regardless of the diplomatic rhetoric.
The Hidden Barriers and Volatility
Beyond the headline tariff rates, Coffin highlights a specific, often overlooked mechanism that continues to penalize Chinese imports: the closure of the de minimis exemption. This policy, which previously allowed small packages valued under $800 to enter duty-free, has been effectively neutralized by a new "cheap imports tax." Coffin details how this "applies either a 54% tariff or $100 per parcel for packages that are valued below $800," a move that targets companies like Shein and Temu. "You can see that tariff here will have a meaningful impact," he asserts, given that these goods represented roughly a tenth of total US imports from China in 2024. This detail underscores that the administration is not merely adjusting broad economic levers but is surgically targeting specific business models, adding another layer of uncertainty for global commerce.
The volatility of this policy environment is perhaps the most significant long-term risk. Coffin points out that while the hope is to "onshore manufacturing back into the United States," the current climate is too unstable to encourage such investment. "Until the situation stabilizes it's unlikely that we'll see that companies don't face much incentive to invest in the United States when the trade policy has proven so volatile," he argues. This is a powerful critique of the administration's strategy: by treating trade policy as a series of reactive escalations and de-escalations, the executive branch may be undermining the very goal of domestic manufacturing growth. The history of the 2018 trade war serves as a cautionary tale, where China fell well short of purchase targets and the trade gap remained largely unchanged.
Bottom Line
Richard Coffin's analysis succeeds by refusing to let the market's short-term relief obscure the long-term structural damage of the trade war. The strongest part of his argument is the dissection of "effective" versus "advertised" tariff rates, which reveals that the economic burden remains at a 90-year high. The biggest vulnerability in the current situation is the lack of a signed, binding agreement; without concrete commitments, the 90-day pause is merely a temporary truce in a conflict that continues to inhibit global trade and fuel inflation. Readers should watch not for the headline tariff numbers, but for the specific sectoral exemptions and the continued enforcement of non-tariff barriers that will determine the true cost of this "reset."
Until the situation stabilizes it's unlikely that we'll see that companies don't face much incentive to invest in the United States when the trade policy has proven so volatile.