As of June 2025, trade talks between the United States and China are still ongoing, with a new round of negotiations currently taking place in London. These talks follow a phone call between U.S. President Donald Trump and Chinese President Xi Jinping last week, which the leaders described as "very positive."
Here is an analysis of the current situation:
Recent Developments and Key Issues:
Fragile Truce: Last month, in Geneva, both sides agreed to suspend most tariffs exceeding 100% that they had imposed on each other for 90 days. This effectively reduced U.S. tariffs on Chinese products to 30% and Chinese tariffs on U.S. imports to 10%. However, this truce is considered fragile, as both countries exchange accusations of violating the non-tariff aspects of the agreement.
New Conflicts: Several new conflicts have emerged, threatening the fragile truce:
Technology and Export Controls: U.S. efforts to limit Chinese companies' access to advanced technology, particularly in semiconductors, are among the main points of contention. The U.S. Department of Commerce recently issued guidance stating that the use of Huawei's "Ascend" AI chips may constitute a violation of U.S. export controls, and discussions are underway to stop the sale of chip design software to China. China has strongly opposed these measures.
Rare Earth Metals: China, which has a significant advantage in mining and processing rare earth metals, has begun requiring licenses to export some of these elements, causing shortages and global concerns. However, China recently indicated that it is addressing these concerns, as some rare earth export licenses have been granted to American automakers.
Student Visas: The U.S. announcement of its intention to revoke visas for certain Chinese students linked to the Communist Party of China or studying in critical areas has added further tension. China sees this as undermining the Geneva Agreement.
Current Negotiations in London: Ongoing talks in London aim to address these core issues and build on the initial agreement reached in Geneva. Key areas of focus include rare earth metals, semiconductor technology, and visa policies.
Presidential Engagement: The phone call between Presidents Trump and Xi played a crucial role in resuming high-level discussions. Trump expressed optimism, stating that the talks "would go well."
Economic Impact: Trade tensions have affected trade figures. Reports indicated that China's exports to the United States in May fell by 34.5% year-on-year.
Market Reaction: Markets responded with cautious optimism, with Chinese stocks rising and U.S. tech stocks gaining modestly, as investors hope for a resolution to supply chain bottlenecks.
Forecasts:
While there are renewed efforts to ease trade tensions, deep-rooted issues remain. The current tariff reductions are temporary, and fundamental disagreements persist regarding market access, technology transfer, and Chinese industrial policies. Analysts indicate that although the current talks may allow for a temporary halt to escalation, reaching a lasting solution to the broader trade dispute remains uncertain. The focus will be on how well these negotiations can craft a more formal framework for ongoing economic dialogue and reach specific agreements on critical issues like access to metals and supply chain stability.