US and China agree to a trade truce, but Beijing seems to be gaining the upper hand

By | June 11, 2025
US China trade truce 2025 agreement handshake

In a significant development for global markets, the United States and China have reached a trade truce following months of escalating tensions. The agreement, confirmed during high-level bilateral talks in Geneva on June 10, 2025, halts any new tariffs for the next six months and aims to reopen stalled channels of communication on trade, technology, and intellectual property.

However, analysts and diplomats alike are pointing to signs that Beijing may have secured the upper hand in the short-term arrangement.

What the Truce Entails

Under the agreement, both sides have pledged to:

  • Refrain from imposing any new tariffs through the end of 2025.
  • Resume quarterly trade talks between top-level economic officials.
  • Cooperate on digital trade frameworks, particularly in semiconductors and AI.
  • Review and possibly revise restrictions on dual-use technologies.

U.S. Trade Representative Katherine Tai stated that the truce “offers breathing room” and “opens the door to a rules-based reset.” In contrast, Chinese Vice Premier Liu He characterized the deal as “a victory for mutual respect and realistic cooperation.”

Beijing’s Tactical Advantage

While the truce halts further damage, several observers believe China has capitalized on the negotiations more effectively:

  • Tariff Rollback Gains: The U.S. has agreed to suspend certain tariffs on Chinese green tech imports, including solar panels and EV components — a sector where China dominates global production.
  • Export Flexibility: China faces fewer restrictions on rare earth mineral exports, which are crucial to U.S. defense and energy sectors.
  • Diplomatic Messaging: Chinese state media has portrayed the truce as proof that “Washington has accepted China’s rise,” feeding into Beijing’s narrative of a shifting global power balance.

“China played a long game and came out with more immediate economic relief while giving up little on structural reforms,” said Ian Bremmer, President of the Eurasia Group.

U.S. Domestic Reactions: A Mixed Bag

The Biden administration is receiving mixed reviews at home, particularly from lawmakers critical of China’s trade practices.

Senator Marco Rubio (R-FL) labeled the deal “a strategic retreat,” arguing that “China has made no new commitments on subsidies or cyber theft.” Meanwhile, industry groups welcomed the cooling of tensions, with the U.S. Chamber of Commerce calling the deal “a necessary step to stabilize fragile global supply chains.”

Markets Respond Positively — For Now

Wall Street reacted favorably to the truce announcement. The Dow Jones jumped 240 points in early trading, while Asian markets also saw gains. Tech and manufacturing sectors rallied amid hopes of smoother cross-border commerce.

However, some experts cautioned that the economic relief could be short-lived if deeper issues remain unresolved.

Strategic Challenges Ahead

Though both sides are emphasizing dialogue and cooperation, deep-rooted challenges remain:

  • Tech Decoupling: Washington’s export restrictions on AI chips and advanced lithography tools remain in place.
  • Taiwan and South China Sea tensions continue to cast a shadow on trade diplomacy.
  • Human rights and labor standards are unlikely to see any alignment.

Conclusion: A Truce, Not a Transformation

The 2025 trade truce between the U.S. and China marks a turning point — but not an end to their economic rivalry. While the pause in hostilities offers global markets a sigh of relief, the terms appear to lean in Beijing’s favor for now.

How Washington navigates the next six months will be key. As the world watches, one thing is clear: the era of economic confrontation between the two superpowers is far from over.