A China-U.S. summit that drew global attention
The United States and China held a landmark bilateral economic and trade meeting in Geneva on May 10–11, 2025 — the first substantive high-level engagement after a period of sharp tariff escalation that had seen US tariffs on Chinese goods reach 145% and China's retaliatory tariffs at 125%.
Both sides agreed to a 90-day tariff truce, reducing US tariffs on Chinese imports from 145% to 30% and China's retaliatory tariffs from 125% to 10%, while suspending select non-tariff countermeasures and establishing a structured consultation mechanism.
Follow-up rounds in London (June 2025) and Stockholm (July–August 2025) extended the truce, broadened the agenda to include rare earth export licensing, semiconductor controls, macroeconomic coordination, and energy trade, and produced a 90-day truce extension through November 2025.
No comprehensive agreement was reached through these talks; key unresolved issues include fentanyl-related tariff surcharges, US export controls on semiconductors and advanced chips, Chinese market access for US firms, and the structural bilateral trade gap.
The diplomatic re-engagement signalled both powers' recognition that sustained decoupling carries systemic global economic risks, with third-country economies — including India — closely watching for trade diversion effects.
Trade War and Tariff Escalation: The US-China Context
A trade war occurs when nations impose successive retaliatory tariffs and non-tariff barriers on each other's goods, typically triggered by trade deficit disputes or allegations of unfair trade practices. The US-China trade conflict, which intensified from 2018 under Section 301 of the US Trade Act of 1974, escalated sharply in 2025 when tariffs on both sides reached historically unprecedented levels.
Key Details
- Section 301, US Trade Act (1974): authorises the USTR to investigate and respond to foreign trade practices deemed "unreasonable or discriminatory" — the legal basis for all US tariff actions against China.
- US tariffs on Chinese goods reached 145% at peak (2025), including stacked layers of Section 301 tariffs, reciprocal tariffs, and fentanyl-related surcharges.
- China's retaliation: 125% tariffs on US goods plus non-tariff measures including export controls on rare earth elements and restrictions on US service firms.
- GATT Article XXVIII bis governs tariff negotiations; GATT Article XIX (Safeguard) and WTO Dispute Settlement procedures are the multilateral channels both sides have largely bypassed in favour of bilateral pressure.
The Geneva tariff truce represented the first step in unwinding the 2025 escalation cycle, using bilateral negotiation rather than the WTO dispute mechanism — a pattern that reflects the limitations of the multilateral rules-based trading system when the two largest economies choose to bypass it.
Rare Earth Elements and Strategic Export Controls
Rare earth elements (REEs) are a group of 17 metallic elements — including cerium, neodymium, lanthanum, and dysprosium — that are essential to high-technology manufacturing including electric vehicle motors, wind turbines, semiconductors, defense electronics, and precision-guided munitions.
Key Details
- China controls approximately 60–70% of global rare earth mining and over 85% of processing capacity, giving it significant leverage over global supply chains.
- China imposed export restrictions on gallium and germanium in August 2023, and on selected rare earths in 2024, as part of technology decoupling countermeasures.
- The US, EU, Japan, and Australia have launched critical mineral supply chain diversification programmes; India's rare earth deposits (third-largest globally by reserve) have gained strategic attention in this context.
- The London talks (June 2025) included a commitment from China to streamline rare earth export licensing — a partial concession in exchange for US signals on relaxing some high-tech export restrictions.
Rare earth export controls emerged as a central bargaining chip in the London and Stockholm rounds, illustrating how resource geography intersects with technology competition in great-power diplomacy.
The "Decoupling vs. De-risking" Debate in US-China Relations
"Decoupling" refers to the structural separation of the US and Chinese economies — reducing bilateral trade, investment, and technology flows to minimise strategic interdependence. "De-risking," a term popularised by the G7 in 2023, is a narrower alternative: reducing dependence in specific strategic sectors (semiconductors, pharmaceuticals, critical minerals) while maintaining broader economic engagement.
Key Details
- The Biden administration formally adopted "de-risking" language at the G7 Hiroshima Summit (May 2023), distancing from the more maximalist decoupling rhetoric.
- US CHIPS and Science Act (2022): $52.7 billion for domestic semiconductor manufacturing — a de-risking instrument.
- US export controls on advanced AI chips (A100, H100) and related technology: in force since October 2022, expanded in October 2023.
- The Geneva-Stockholm truce process reflects the recognition that full decoupling is economically infeasible: bilateral trade remained above $550 billion annually even at peak tariff levels.
The Geneva summit and subsequent rounds represent the operational tension between de-risking rhetoric and economic interdependence reality — both sides sought to stabilise the relationship without resolving the structural competition in technology, military capability, and global influence.
Global Turmoil and Great-Power Stability Management
Periods of systemic global instability — including regional wars, supply chain disruptions, climate events, and pandemics — historically create pressure on great powers to maintain communication channels to prevent miscalculation. The concept of "crisis stability" in international relations theory holds that predictable communication and conflict-resolution mechanisms reduce the risk of unintended escalation.
Key Details
- The 2024–2025 period featured concurrent crises: the Ukraine conflict, Middle East escalation, Taiwan Strait tensions, and global inflationary pressures — all creating incentives for US-China crisis management.
- The bilateral consultation mechanism established at Geneva formalised a channel for economic disputes outside the WTO's overstretched dispute settlement body.
- India's strategic calculus: as the world's fifth-largest economy and a key manufacturing alternative to China, India benefits from US-China de-escalation reducing tariff uncertainty, but faces trade diversion risk if the US-China truce leads to Chinese export dumping into Indian markets.
The article's central thesis — that global turmoil heightens the need for stable China-US ties — reflects the classical realist argument that systemic instability creates shared interests even between strategic rivals, making managed competition preferable to uncontrolled confrontation.
- Geneva US-China trade talks: May 10–11, 2025.
- US tariffs on Chinese goods at peak: 145%; post-Geneva truce: 30%.
- China's retaliatory tariffs at peak: 125%; post-Geneva truce: 10%.
- Truce duration: 90 days; extended at Stockholm through November 2025.
- London round: June 9–10, 2025 — produced non-binding framework for structured dialogue.
- Stockholm round: July 28–29, 2025 — agenda included macroeconomic coordination, rare earth exports, energy trade.
- China's share of global rare earth processing: approximately 85%.
- US CHIPS and Science Act (2022): $52.7 billion for domestic semiconductor investment.
- US-China bilateral trade in 2024: over $550 billion annually despite tariff escalation.
- Section 301, US Trade Act (1974): legal basis for US tariff actions against China.