US, China revive trade deal amid ongoing tensions; tariffs and export barriers remain high

Washington DC: The United States and China have reached a new trade agreement, reviving terms first agreed to in Geneva last month, after escalating tensions led to a virtual halt in bilateral trade, CNN reported.

The agreement was confirmed Tuesday night by top negotiators from both sides and will now be forwarded to their respective leaders for final approval. The trade truce brings temporary relief to global markets, businesses and consumers rattled by months of tariff hikes and growing uncertainty. President Donald Trump announced on Truth Social on Wednesday that the “deal” was complete, confirming that both countries would ease export restrictions. “Our deal with China is done,” Trump posted in all-caps, stating that China would supply “full magnets, and any necessary rare earths...up front,” as per the Geneva framework.

However, despite the breakthrough, trade relations remain fraught. Tariff levels are still at historic highs, and the US has not lifted restrictions on Chinese autos or resumed sales of advanced AI chips. As CNN noted, this truce is more a reset to the status quo before April 2 than a full resolution of underlying trade tensions.

After Trump’s “Liberation Day” announcement in April that imposed a 145% tariff on most Chinese imports, trade had nearly frozen. US Treasury Secretary Scott Bessent, the lead negotiator, admitted previous tariff levels were “unsustainable.” On May 12, both countries agreed to roll back some tariffs, and economists scaled back recession fears.

But mutual accusations of non-compliance quickly followed. Trump officials accused China of delaying the release of rare earth materials vital for electronics and defense, while China claimed the US failed to honour its Geneva commitments. Industry experts told CNN that, despite Xi Jinping’s reported promises, rare earth flows had not returned to previous levels.

Meanwhile, the second Trump administration has enforced steep trade barriers, including a 10% universal tariff and an extra 20% on Chinese goods linked to fentanyl concerns. The removal of the de minimis exemption on sub-$800 packages has also impacted Chinese e-commerce giants like Shein and Temu. (ANI)

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