Navin Girishankar
For businesses and consumers alike, the joint statement from Washington and Beijing offered signs of a détente in the U.S.-China trade war. Following the weekend’s Geneva talks, both sides have decided to roll back tariffs. By some estimates, average U.S. rates on Chinese goods will fall to about 40 percent, while China’s tariffs on U.S. products will drop to roughly 33 percent. It is tempting to interpret this pullback from the brink—a self-inflicted embargo—as the “total reset” President Trump claimed. But tariffs are still too high, and Groundhog Day–like market rallies should not be confused with strategic success.
If the brinkmanship of the past several weeks is to have any lasting value to the United States, then the Geneva talks were just the beginnings of negotiation over economic security and technology issues that are the heart of the U.S.-China relationship. That will remain the test for the Trump administration’s tariff gambit: Will it prove to be a master class in leverage that delivers “a big beautiful rebalancing”—or an own goal of historic proportions that erodes the United States’ global economic leadership? For now, 90-day reprieves and on-again, off-again import duties underscore the capricious nature of U.S. economic statecraft.
Looking ahead, both sides have promised to put in place a mechanism to prevent misunderstandings in future talks. Should future talks materialize (still an “if”), the Trump administration would do well to condition additional tariff relief on progress on longstanding issues with China such as intellectual property theft, cyber espionage, forced technology transfer, dual use risks, supply chain chokepoints, nontariff barriers to U.S. firms, and currency manipulation. We can expect that China, far from being on the back foot, will press its own demands. Beijing will likely use tariff talks to gain concessions in terms of U.S. export controls, outbound investment restrictions, and the broader scaffolding of U.S. tech dominance—from chip design to AI standards.
By most accounts, China is in a better negotiating position than in 2018. It is able to rely on internal demand, and it has diversified trade relationships, including in Asia—evident in last week’s joint statement with Japan, Korea, and the Association of Southeast Asian Nations. It has also made strides across advanced technologies, including AI, biotech, and quantum, and in critical minerals self-sufficiency.
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