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After months of tension and strategic rivalry, the U.S. and China have resumed high-level talks. But don’t mistake this as a fresh start. The discussions are more about managing competition than mending ties. Both sides remain cautious, prioritizing stability over reconciliation, with no illusions of returning to the past.
US-China Trade Talks in London: A Fragile Pause, Not a Reset
Trade negotiations between the United States and China in London represent a cautious pause in escalating tensions—less a breakthrough, more a tactical move to prevent further decline. This is not the start of a new chapter, but a temporary truce that remains vulnerable to reversal at any time.
At the heart of the standoff lies a more fundamental issue: national security. Both nations now approach trade through a strategic lens, where economic decisions are closely tied to geopolitical interests. Simple agreements or symbolic handshakes won’t bridge that divide.
Washington must come to terms with the fact that Beijing seeks parity and respect, and won’t agree to any long-term arrangement that feels one-sided. At the same time, China needs to recognize that it’s no longer business as usual—greater transparency, reciprocity, and access to its markets will be expected.
Absent mutual understanding and real compromise, the world risks a prolonged era of economic hostility—one that could destabilize global trade and heighten geopolitical tensions.
The recent de-escalation in London is a welcome step, though its stability remains uncertain. Past efforts at rapprochement have quickly devolved into renewed tensions. Following the initial optimism of a trade-war ceasefire agreed in Geneva this May, both sides soon accused each other of violating the terms—specifically, a temporary rollback of tariffs that had soared beyond 100%.
Now, negotiators claim to have reached a preliminary agreement on a framework to ease trade tensions, building on the consensus achieved in Geneva. Delegations from both parties will now present the proposal to their respective leaders, after nearly 20 hours of intensive negotiations across two days.
“If the presidents approve it, we will move toward implementation,” said US Commerce Secretary Howard Lutnick. While the full terms of the agreement haven’t yet been disclosed, US officials expressed strong confidence that key disputes—particularly those involving the trade of rare earth minerals and magnets—will be resolved.
There are no clear winners or losers in this situation,” says Steve Okun, founder and CEO of AC Advisors. He emphasizes that the core issues go far beyond any single round of negotiations. “The Trump administration must clarify whether it sees Beijing as a strategic rival or an existential threat,” he explains. “While the U.S. can absorb the economic impact of a trade war, Xi Jinping is better positioned to withstand political fallout than Donald Trump. That creates a standoff — one side holds economic leverage, the other political endurance.”
Despite China’s slowing economy, President Xi appears content to wait things out. Recent trade data highlights the toll of the ongoing tensions: exports grew less than expected, with U.S.-bound shipments suffering their steepest decline since February 2020, at the start of the pandemic. Yet, robust sales to other global markets are offering some relief, helping to cushion an economy grappling with deflation and sluggish domestic demand.
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Beijing continues to present the trade war as an issue created by Washington, claiming that China is being unfairly singled out. In a recent commentary, Xinhua warned that the U.S.’s security-driven lens on economic matters could threaten global cooperation.
According to Ryan Hass of the Brookings Institution, there’s still a path toward peaceful coexistence — but it requires compromise. For any meaningful progress with Xi Jinping, Trump must acknowledge that both nations are global powers. Neither can impose its will on the other. While high tariffs hurt both sides, they alone won’t force either to back down.
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The American public has little interest in a broader conflict with China. While dissatisfaction with Beijing’s behavior is widespread, the top priority remains avoiding war. Americans want to manage the rivalry without letting it spiral into open confrontation.
To make that possible, Washington needs to understand that Beijing values respect deeply. The U.S. should take note of China’s concept of mianzi, or “face.” Xi will only accept a long-term deal he can present—both domestically and internationally—as a win. After judging the last trade deal with Trump as overly favorable to the U.S., China won’t make the same mistake again.
Although Beijing isn’t always eager to extend the same face-saving gestures, it would be smart to offer some to Trump as well. His tariffs have been heavy-handed, but his base expects displays of strength, not retreat. China, too, understands what happens when leaders must respond to domestic political pressures.
Neither country has the leverage to force the other into a clear defeat. At best, recent talks in London may have set the stage for a slightly less confrontational future. That alone is progress — but it’s far too early to call it a reset.
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