China–USA Trade Truce: Is the Honeymoon Over Already?

Picture Credit: bruegel.org

Just weeks after the much-publicized China–USA trade truce in Geneva, tensions have flared once again, raising questions about whether the fragile honeymoon is already over. China has accused the United States of “unilaterally provoking new economic and trade frictions,” claiming it has strictly adhered to the terms of the Geneva agreement. In contrast, President Donald Trump alleged that China had “totally violated” the deal, which had paused months of tariff escalation.

The Geneva truce created a 90-day window for both sides to work out a broader trade deal, suspending tariffs and non-tariff countermeasures. However, US officials now say talks are “stalled,” with Beijing’s rare earth export controls emerging as a major sticking point. These minerals are crucial for a wide array of US industries, from smartphones to advanced weapons systems. While the US expected China to ease these restrictions, Beijing’s export regime remains largely unchanged.

In response, Washington has taken a series of retaliatory steps, including export controls on AI chips and revoking Chinese student visas. China’s Commerce Ministry has slammed these actions as discriminatory and a breach of the Geneva consensus.

Picture Credit: nytimes.com

Adding to the uncertainty is China’s shrinking manufacturing sector and its pushback against being labeled the aggressor. Meanwhile, US officials, including Treasury Secretary Scott Bessent, have suggested that the rare earth issue may be a technical snag—or a deliberate tactic.

As the blame game intensifies, the spotlight now shifts to the personal diplomacy between Trump and Chinese President Xi Jinping. Their next conversation could determine whether this truce holds—or whether the world’s two largest economies are on the brink of renewed conflict. What began as a pause in hostilities now seems more like a reset in an ongoing rivalry, rather than a genuine path to resolution.