The On-Again, Off-Again China-US Trade War

On June 11, U.S. President Donald Trump, writing in his typical style on TruthSocial, proclaimed, “OUR DEAL WITH CHINA IS DONE.” Posting after trade talks between the Chinese and U.S. delegations in London, Trump described the outline of the supposed agreement: China would resume “up front” the supply of rare earth products to U.S. businesses, while the U.S. would not follow through on threats to drastically reduce student visas to Chinese nationals. And both sides would lower their tariff rates (although rates remain higher than before Trump took office).

“RELATIONSHIP IS EXCELLENT!” Trump concluded.

The president had taken a very different view less than two weeks earlier. On May 30, he complained that China “HAS TOTALLY VIOLATED ITS AGREEMENT WITH US,” ending his message with a vague threat: “So much for being Mr. NICE GUY!”

The agreement Trump referred to in his May 30 post was the one reached after the first round of China-U.S. trade talks, held in Geneva, Switzerland, on May 10 and 11. The goal then was to negotiate a truce to the escalating trade war sparked by Trump’s “Liberation Day” announcement, which had seen both sides raise tariffs to over 100 percent.

In a post on May 10, Trump called the Geneva talks “a total reset” of the bilateral trade relationship. A White House fact sheet issued two days later went further, proclaiming that China and the U.S. had reached a “historic” agreement: “This trade deal is a win for the United States, demonstrating President Trump’s unparalleled expertise in securing deals that benefit the American people.”

Over the course of the next month, the U.S. and China accused each other of violating the original deal, resumed their punitive measures, and then reached a new agreement in London.

U.S. Commerce Secretary Howard Lutnick described the chain of events as follows:

“So, what happened is they set up the Geneva truce…Tariffs came down. But the Chinese had these rare earth magnets and they were slow rolling it [the resumption of exports]. And so … when they weren’t delivering the rare earth magnets, we started putting on our countermeasures, right? We cut planes, ethanol, [Secretary of State] Marco Rubio put out that students may not be able to come to America…”

 Eventually, Lutnick continued, Trump and China’s President Xi Jinping held a phone call where they decided to commit (or perhaps more accurately, re-commit) to an off-ramp. That paved the way for the talks in June, which Lutnick said resulted in a “handshake deal” to implement the earlier agreement reached in May.

Noted China watcher Bill Bishop, who runs the Sinocism newsletter, put it this way: In London, “American and Chinese negotiators agreed on framework of measures to get back to the framework they thought they agreed on in Geneva a couple of weeks ago.”

Even when the first “deal” was reached, back in May, analysts were quick to point out the potential cracks. China and the United States issued a rare joint statement after the Geneva talks, which outlined the lowering of tariffs in detail. However, there was no direct mention of rare earth exports at all, only a vague statement that China would “adopt all necessary administrative measures to suspend or remove the non-tariff countermeasures taken against the United States since April 2, 2025.”

The U.S. clearly expected that China was going to remove its restrictions on rare earth exports, which Beijing had implemented during the successive rounds of tit-for-tat trade escalations. China controls upwards of 90 percent of global supply of processed rare earth elements, which are critical components in electronic goods. Being cut off from that supply is unsustainable for the U.S. However, in announcing the export restrictions China was careful not to explicitly describe the move as retaliation against the U.S.; instead, it was framed as a blanket ban covering all exports for “national security” reasons.

China apparently decided that its rare earth restrictions were not, in fact, “non-tariff countermeasures taken against the United States,” and thus were not covered by the Geneva agreement.

Washington disagreed – strongly. That’s why, just weeks after the Geneva truce, Trump was blasting China on social media while his administration was back to hammering China with every tool available: increased export controls on AI chips and chip design software, restrictions on critical passenger jet technology, as well as the threat to sharply curtail Chinese student visas.

As seen above, Lutnick framed these as retaliatory measures. China, meanwhile, blamed the U.S. for reneging on its Geneva commitments.

In the grand scheme of things, this process is not uncommon, although the scale and speed of the rupture were impressive. Accusing China of failing to live up to its trade commitments is a near-univeral experience for U.S. administrations. Every U.S. president since normalization has had the experience of negotiating an agreement with China – on topics ranging from IP protection to cybercrime to market access – only to find implementation elusive.

With that in mind, it’s always worth being cautious about what, explicitly, was agreed upon. In retrospect (and even in the moment, for those paying attention) the lack of any mention of rare earths in the joint statement, or in China’s readout, after the Geneva talks was a red flag.

It’s notable that the June “deal” was even less formal than its predecessor. No formal written agreement has been produced by either side. There wasn’t even a joint statement, unlike the May talks. And this time, there was no official White House fact sheet touting “a historic trade win.”

Indeed, there was no mention of a “deal” at all from China. Instead, a Chinese official from the Ministry of Commerce described the outcome this way: “The two sides have agreed in principle on the framework for implementing the consensus between the two heads of state during their phone talks on June 5, as well as those reached at the Geneva talks.” To Beijing, the London talks marked a preliminary step, not a final agreement. And that means it’s subject to being derailed by subsequent events.

Vice Premier He Lifeng, who represented China at both sets of talks, said as much: “China reiterates that the United States should work with China to honor their words with actions, and demonstrate sincerity in keeping commitments and concrete efforts to implement consensus, so as to jointly safeguard the hard-won outcomes of dialogue,” he warned.

For Trump, the June “agreement” was a end point; for China it was the start of a longer process of dialogue that should “be conducive to strengthening trust between China and the United States.” If that doesn’t happen – and current trends in the relationship strongly suggest it won’t – China will walk away from its “commitments,” which were never put on paper to begin with.

Even if Beijing sticks to the letter of the “handshake” agreement, it’s at best a temporary truce. According to Bishop, China’s pledge to resume rare earth exports to U.S. businesses expires in six months.

So what’s the Trump administration’s plan for making sure this cycle – a deal, followed by angry accusations and renewed retaliation, and then another deal – doesn’t repeat itself? There doesn’t seem to be one. When U.S. Trade Representative Jamieson Greer was asked just that question, he brushed it off with a flippant response: “As long as Donald Trump is the president, there is going to be enforcement, just trust me on that.”

Based on what happened after Geneva, what Greer has in mind is not “enforcement” so much as restarting the trade war when China is perceived to have violated the informal deal that was discussed, but never codified.