Introduction:
The US-China trade conflict, which has spanned since 2018, has seen a partial de-escalation after the Geneva Agreement, announced on May 12, 2025. The deal, set to take effect on May 14, 2025, brings immediate relief by rolling back some of the most burdensome tariffs and countermeasures between the two superpowers.
While the deal may restore some stability to the global economy, significant barriers remain, raising doubts about its sustainability in the long term.
Quick Overview: Key Elements of the Geneva Agreement
Tariff Reductions: US to cut tariffs on Chinese goods from 145% to 30%; China to reduce tariffs from 125% to 10%.
90-Day Trial Period: The US will reduce tariffs on specific goods, like “Liberation Day” items, from 34% to 10% for 90 days.
Tariff Lifting on Certain Goods: The US will eliminate some tariffs on goods, including consumer electronics and industrial components.
Non-Tariff Measures Rolled Back: China will dismantle blacklists of US firms and suspend its anti-monopoly probe into DuPont.
Persistent Sector-Specific Tariffs: Tariffs on electric vehicles, steel, and aluminum remain unaffected by the agreement.
techovedas.com/trump-scraps-ai-diffusion-rules-3-key-impacts-on-chips-middle-east-and-nvidia
Background: The Escalating US-China Trade War
The US-China tariff war began under the Trump administration in 2018, when the US imposed tariffs on Chinese imports due to intellectual property concerns and alleged unfair trade practices.
In retaliation, China targeted US exports, sparking a tit-for-tat tariff battle that disrupted global supply chains, affected consumer goods prices, and strained economic relations between the two nations.
By 2025, tariffs had escalated to historically high levels, impacting industries ranging from electronics to raw materials.
The Geneva Agreement represents a key development in this trade war, offering some hope for a resolution but also highlighting the limitations of the deal.
https://www.linkedin.com/company/techovedas
Details of the Geneva Deal: What’s in the Agreement?
The Geneva deal includes a notable reduction in tariffs, providing some immediate economic relief. However, the changes are far from comprehensive. Below is a table summarizing the new tariff rates:
| Category | US Tariffs Before | US Tariffs After | China Tariffs Before | China Tariffs After |
|---|---|---|---|---|
| General Imports | 145% | 30% | 125% | 10% |
| “Liberation Day” Goods | 34% | 10% | – | – |
| EVs, Steel, Aluminum | 115% | 115% | 115% | 115% |
While tariffs on many goods will be reduced, some sector-specific tariffs—particularly on electric vehicles, steel, and aluminum—will remain unchanged.
These sectors, critical to both economies, are likely to continue facing barriers that undermine the truce’s completeness.
https://www.linkedin.com/company/techovedas
Uncertainty Surrounding Rare Earths and Technology Controls
One of the most contentious issues remains China’s export controls on rare earths, essential for industries like semiconductors and electric vehicles.
In April 2025, China introduced licensing requirements for the export of seven critical rare earths, exacerbating concerns in the US tech sector.
The Geneva agreement does not clearly resolve this issue, leaving open questions about how China will implement these controls moving forward.
Additionally, the technology sector remains a flashpoint, with China maintaining blacklists of US firms and continuing to impose restrictions on American tech companies like Huawei.
While some blacklists and probes will be lifted under the Geneva Agreement, China’s overall stance on tech competition remains unchanged.
Strategic Calculations Behind the Truce
This temporary truce reflects strategic calculations on both sides. For the US, tariff cuts are aimed at reducing inflation and alleviating pressure on domestic manufacturers reliant on Chinese imports.
The 90-day “Liberation Day” tariff reduction allows the US to monitor China’s compliance before making further adjustments.
However, the continued existence of pre-April tariffs and sector-specific duties shows that the US is still focused on protecting critical industries from Chinese economic strategies.
For China, the Geneva Agreement helps stabilize its export-driven economy. By reducing tariffs and easing non-tariff measures, China aims to secure access to the Western market amid rising domestic economic pressures.
However, the continued control over rare earths and strategic technologies demonstrates China’s intent to maintain influence over critical resources.
Challenges to Long-Term Stability
Several key challenges threaten the long-term success of the Geneva truce:
Enforcement Issues: China’s selective implementation of tariff reductions and rare earth export licenses could provoke renewed US tariffs, escalating tensions once more.
Domestic Politics: Both the US and China face significant internal opposition to further trade concessions. Protectionist sentiment in the US and Xi Jinping’s push for economic self-reliance in China may complicate negotiations.
Geopolitical Risks: Broader geopolitical tensions, such as those related to Taiwan, human rights concerns, and dual-use technology, could undermine any economic detente, leading to a breakdown in the truce.
techovedas.com/125-tariffs-china-hits-back-with-on-u-s-goods-after-trump-escalates-trade-war/
Conclusion: A Tactical Pause, Not a Lasting Solution
The Geneva agreement offers a step forward in the US-China tariff war by reducing tariffs and easing some restrictions. However, it is far from a comprehensive solution.
Sector-specific tariffs, unresolved issues like rare earths, and ongoing geopolitical frictions underscore the deal’s fragility.
The truce may offer short-term relief, but lasting peace will require addressing deeper structural issues in the relationship.
Both nations will need to balance domestic pressures and international challenges if they hope to maintain long-term stability in their economic relationship.
As the Semiconductor Investment Game goes dicey, trust @Techovedas for any Semiconductor Hassles!
