“The Big Sigh as US-China Engage,” by author and IP attorney Timothy Trainer
May 13, 2025: The “deal” that isn’t really a deal. This amounts to buying time to allow both sides to sit down and talk about the possibility of some type of economic agreement. Simply talking caused U.S. markets to fly high on May 12: Wall Street equity indexes close higher after US-China tariff truce | Reuters. It’s worth noting, too, that Reuters refers to what happened as a truce, not a deal.
Though the two governments announced this tariff truce and lowered tariff rates, a few trade issues seemed to evade clear answers. Will China ease restrictions on exports of rare earth minerals that U.S. companies and the defense industry rely upon? There seems to be some opinions that China is likely to continue using rare earth minerals as a lever in its negotiations with the U.S.: After U.S. and China pause tariffs, rare mineral exports now in the spotlight of future trade deals | Fortune.
Any U.S.-China bilateral engagement is wrought with significant challenges. These challenges are because the trade value between the two biggest economies was approximately $583 billion in 2024. https://www.census.gov/foreign-trade/balance/c5700.html. Given the volume and value of trade between the two countries, the negotiations will require a lot of hard work and a commitment from both sides to fulfill the obligations an agreement when one is reached.
It is worth noting that the U.S. and China have engaged in years of discussions related to bilateral economic and commercial activities. The relationship has had its turbulent periods. Before China entered the World Trade Organization, the U.S.’s allegations of China’s massive exports of substandard, counterfeit goods to our market triggered legally required consultations in the late 1990s. That period also included U.S. threats to impose trade sanctions. The sanctions were avoided when China committed to undertake steps to address the problem. Unfortunately, years after these commitments, China has remained the main source of counterfeit goods seized by U.S. authorities at the border.
The U.S. and China have also created other mechanisms for bilateral talks aimed at addressing economic and commercial issues. As far back as 1983, the U.S. and China established the Joint Commission on Commerce and Trade for the purpose of “addressing bilateral trade matters and promoting commercial opportunities between the United States and China.” geneva.usmission.gov. From 2006 to 2017, the U.S. and China also engaged in another bilateral discussion framework that began as the Strategic Economic Dialogue then renamed the Comprehensive Economic Dialogue.
Basically, the two governments have been in constant dialogue on economic and commercial issues for decades. Anyone can argue the efficacy of all these meetings regardless of the framework constructed for holding bilateral talks. Each side has known what the other is unhappy about throughout the decades as they’ve been discussed for many years.
As the two governments have called a truce while they discuss how to move forward, a sigh of relief could be heard around the world on May 12. We will now await what happens during the discussions that will be held over the coming weeks.
What are the two heads of government doing? While the U.S. tends to claim some victory, China’s Xi was meeting with Brazil’s president as those two countries work to hammer out agreements on future projects and cement a stronger economic bond. Brazil seeks China trade boost amid Trump tariff chaos as Lula meets Xi. In addition, China’s Xi will be speaking at a forum this week in Shanghai where Caribbean and Latin American government heads of state will be in attendance. China’s President Xi Jinping to speak at opening of China-CELAC Forum on Tuesday | Reuters.
Americans shouldn’t be fooled into thinking that all is well because of the current U.S.-China truce in the tariff war. The geo-economic strategies of all our trading partners need to be studied as our future economic health depends upon what others do. In particular, it is critical to our economic future that we watch and analyze how China is working to create economic relationships to protect itself from U.S. decisions that might have negative effects on its economy. The question is whether the team the U.S. has assembled is up to the task of what’s needed for the U.S. economy to thrive in a global environment.
