The United States economy received a welcome boost in May 2025, as consumer confidence surged following a temporary trade truce between Washington and Beijing. This significant development ends months of mounting uncertainty, offering a glimmer of stability amid global economic headwinds.
According to the latest data from the Conference Board, a leading global business research association, the U.S. Consumer Confidence Index jumped by 12.3 points to 98.0 in May—beating market expectations that had pegged the figure at 87.0. This marks the most substantial rise in consumer sentiment since early 2023 and breaks a five-month streak of declining confidence across American households.
The catalyst behind this rebound is the White House’s recent announcement of a 90-day trade truce with China, which includes a significant reduction in tariffs. The agreement, revealed on May 12, lowered tariffs on Chinese imports from 145% to 30%, easing the strain on businesses and consumers who have faced rising prices on everyday goods.
While the truce is temporary, it has nonetheless sparked optimism among consumers and investors, particularly in industries reliant on imported goods from China—such as electronics, automotive, apparel, and manufacturing components.
“The rebound in confidence was already taking shape before the announcement of the trade deal, but momentum clearly picked up afterward,” noted Stephanie Guichard, a senior economist at the Conference Board. “Consumers are welcoming any sign of relief, but inflationary concerns and the broader impact of the ongoing tariff regime remain pressing issues.”
The Conference Board survey, conducted in the first half of May, shows that American households are increasingly hopeful about future economic conditions. Nearly half of respondents reported expectations of better business conditions in the next six months, while more than one-third anticipated improved job prospects.
However, concerns still linger. Tariffs—despite being temporarily lowered—continue to drive up the cost of imported goods, with some retailers already passing those costs onto consumers. This trend has been especially pronounced in lower-income households, where rising grocery and utility bills have constrained purchasing power.
According to the U.S. Bureau of Labor Statistics, core inflation rose by 3.5% year-on-year in April, while food prices climbed 4.1%. Analysts warn that should the trade deal collapse or be revoked, prices may spike further, potentially dampening consumer sentiment once again.
Economists and trade analysts are hailing the truce as a step in the right direction, but many stress that the underlying issues in U.S.-China trade relations remain unresolved.
“This deal provides short-term breathing space for American consumers and businesses, but the larger structural trade disagreements—such as intellectual property, technology transfer, and market access—are far from being settled,” said Dr. Laura Chen, a senior fellow in international economics at the Brookings Institution.
Chen added that the 90-day window presents a limited opportunity for negotiators on both sides to make progress, but warned that renewed tensions could derail the current gains.
“The danger is that if no permanent solution is reached, this brief rebound in confidence will give way to another period of economic volatility,” she explained.
The trade truce comes amid growing political pressure on President Donald Trump’s administration to temper its hardline trade strategy, which has drawn criticism both at home and abroad. With the 2026 midterm elections approaching, analysts suggest the move may be aimed at calming markets and voters concerned about inflation and stagnation.
“The administration is facing pressure from American manufacturers and retailers who have been disproportionately affected by the escalating tariffs,” said James Rollins, trade analyst at MarketScope. “Reducing tariffs—even temporarily—helps reduce some of that pressure without appearing to fully concede to Beijing.”
Meanwhile, China’s own economy appears to be rebounding, with official figures showing a 12.4% year-on-year surge in exports in April 2025. The Chinese Ministry of Commerce attributed the surge to improved global demand and a relaxation of pandemic-era trade restrictions.
Financial markets responded positively to the consumer confidence data and trade deal. The Dow Jones Industrial Average rose 1.2% on Tuesday, while the S&P 500 posted a 0.9% gain. The Nasdaq Composite, heavily influenced by tech stocks with exposure to China, jumped by 1.5%.
Retail and consumer goods stocks led the rally, with companies like Walmart, Apple, and Nike seeing gains in anticipation of reduced import costs.
“The trade truce and confidence rebound offer a much-needed sentiment lift after a shaky first quarter,” said Martha Greene, equity strategist at JP Global. “Investors are hopeful that this could lead to more constructive engagement between the world’s two largest economies.”
The ripple effect of the U.S.-China trade truce is already being felt globally. In Europe, industrial producers who supply parts to both countries have expressed cautious optimism. Asian markets, particularly in Japan and South Korea, also rallied following the announcement, banking on renewed demand and improved logistics flows.
International bodies like the World Trade Organization (WTO) and the International Monetary Fund (IMF) have urged both countries to use this moment of calm to make progress on more comprehensive trade agreements.
“The global economy cannot afford another prolonged trade war,” IMF Managing Director Kristalina Georgieva warned. “Multilateral cooperation and predictable trade rules are critical to ensuring sustainable recovery from the post-pandemic slowdown.”
While the May rebound in U.S. consumer confidence is a promising development, its sustainability will hinge on whether Washington and Beijing can translate the temporary truce into a lasting agreement. For now, American households are cautiously optimistic—but many remain wary of what lies ahead.
Policymakers, economists, and business leaders alike will be watching the next 90 days closely, as both governments attempt to hammer out a more permanent resolution to one of the most consequential trade disputes in modern history.