US and China seem to be burying the tariff hatchet for now. Reportedly, US and Chinese officials said on Tuesday they had agreed on a framework to get their trade truce back on track and remove China’s export restrictions on rare earths while offering little sign of a durable resolution to longstanding trade tensions.
The US and China have been engaging in an escalating tariff war that has been sending markets around the world in a downward spiral. The two countries had reached a 90-day truce, but the increasingly hostile rhetoric from US President Donald Trump kept hostilities alive between the two countries, regardless of the truce.
Reportedly, at the end of two days of intense negotiations in London, U.S. Commerce Secretary Howard Lutnick told reporters the framework deal puts “meat on the bones” of an agreement reached last month in Geneva to ease bilateral retaliatory tariffs that had reached crushing triple-digit levels.
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“We have reached a framework to implement the Geneva consensus and the call between the two presidents,” Lutnick said, adding that both sides will now return to present the framework to their respective presidents for approvals.
“And if that is approved, we will then implement the framework,” he added.
This deal may keep the Geneva agreement from falling apart over competing export controls, but it may not do much against the continuous rhetoric spewed by Trump and his unilateral tariffs that are a means to challenge China’s supposed state-led, export-driven economic model.
Reportedly, the two sides left Geneva with fundamentally different views of the terms of that agreement and needed to be more specific on required actions, said Josh Lipsky, senior director of the Atlantic Council’s GeoEconomics Center in Washington.
“They are back to square one but that’s much better than square zero,” Lipsky added.
Chris Weston, head of research at Pepperstone in Melbourne, said that the devil would be in the details, but the lack of reaction suggests this outcome was fully expected. “The details matter, especially around the degree of rare earths bound for the U.S., and the subsequent freedom for U.S.-produced chips to head east, but for now as long as the headlines of talks between the two parties remain constructive, risk assets should remain supported.”
Reportedly, the two sides have until August 10 to negotiate a more comprehensive agreement to ease trade tensions, or tariff rates will snap back from about 30% to 145% on the U.S. side and from 10% to 125% on the Chinese side.
The tentative 2025 trade agreement between the U.S. and China marks a potential turning point in their strained economic relationship. For both countries, it offers a temporary easing of tensions, particularly through a 90-day pause on escalating tariffs.
This move could stabilize markets and foster a more constructive dialogue after years of trade conflict. For the U.S., the deal may reduce supply chain disruptions and ease inflationary pressures by improving access to Chinese goods and critical minerals. For China, it provides an opportunity to ease economic pressure from U.S. tariffs and protect key exports. However, the lack of detailed commitments suggests the agreement is more symbolic than transformational. Structural issues—such as intellectual property rights, industrial subsidies, and export controls—remain unresolved. Still, the resumption of formal negotiations indicates both sides are willing to engage, which could pave the way for more substantive progress in the future.