US, China revive trade deal amid ongoing tensions; tariffs and export barriers remain high

The agreement was confirmed Tuesday night by top negotiators from both sides and will now be forwarded to their respective leaders for final approval. The trade truce brings temporary relief to global markets, businesses and consumers rattled by months of tariff hikes and growing uncertainty.

President Donald Trump announced on Truth Social on Wednesday that the "deal" was complete, confirming that both countries would ease export restrictions. "Our deal with China is done," Trump posted in all-caps, stating that China would supply "full magnets, and any necessary rare earths...up front," as per the Geneva framework.

However, despite the breakthrough, trade relations remain fraught. Tariff levels are still at historic highs, and the US has not lifted restrictions on Chinese autos or resumed sales of advanced AI chips. As CNN noted, this truce is more a reset to the status quo before April 2 than a full resolution of underlying trade tensions.

After Trump's "Liberation Day" announcement in April that imposed a 145% tariff on most Chinese imports, trade had nearly frozen. US Treasury Secretary Scott Bessent, the lead negotiator, admitted previous tariff levels were "unsustainable." On May 12, both countries agreed to roll back some tariffs, and economists scaled back recession fears.

But mutual accusations of non-compliance quickly followed. Trump officials accused China of delaying the release of rare earth materials vital for electronics and defense, while China claimed the US failed to honour its Geneva commitments. Industry experts told CNN that, despite Xi Jinping's reported promises, rare earth flows had not returned to previous levels.

Meanwhile, the second Trump administration has enforced steep trade barriers, including a 10% universal tariff and an extra 20% on Chinese goods linked to fentanyl concerns. The removal of the de minimis exemption on sub-$800 packages has also impacted Chinese e-commerce giants like Shein and Temu.

Major firms like Apple face increased costs, with the company projecting a $900 million quarterly hike due to current tariffs. Others, like Boeing, have virtually lost access to China's market since 2019, despite no official bans.

Still, Trump expressed optimism: "President XI and I are going to work closely together to open up China to American Trade," he said on Wednesday, calling it a potential "great WIN for both countries."

Meanwhile, according to Chinese state media report Global Times when asked whether China can confirm US President Donald Trump's claim, Chinese Foreign Ministry spokesperson Lin Jian on Thursday stressed that the China-US trade meeting was held under the strategic guidance of the two heads of state, and the two sides reached a consensus in principle on the framework of measures to implement the important consensus reached by the two heads of state in their phone call on June 5 and consolidate the results of the Geneva economic and trade talks, and made new progress in resolving the economic and trade concerns of both sides.

The Chinese spokesperson was cited in the Global Times report as saying that China always honours its commitments with concrete actions and that now that a consensus has been reached, both sides should abide by it.

"It is hoped that the US will work with China to implement the important consensus reached by the two heads of state during their phone call, give full play to the role of the China-US economic and trade consultation mechanism, enhance consensus, reduce misunderstandings and strengthen cooperation through communication and dialogue," Lin said when asked abou the social media post of Trump that the US has reached a deal with China and China will supply rare earths magnets and others to the United States.