U.S.-China gestures suggest calm, but tensions remain deep

Although the trade ceasefire between the United States and China appears to be holding, analysts warn that détente remains fragile in a rivalry increasingly defined by strategic competition.

A series of decisions outlined in a comprehensive trade deal that U.S. President Donald Trump signed last month with Chinese President Xi Jinping took effect on Monday and included the lifting of costly tariffs and export controls.

The United States halved fentanyl-related tariffs on Chinese imports to 10% and extended a cease-fire period for one year that reduced reciprocal tariff rates from 34% to 10%.

In return, China’s Ministry of Commerce on Monday lifted some export restrictions to the United States on critical minerals and rare earth materials. These restrictions, first imposed on October 9, targeted materials essential to military hardware, semiconductors and other high-tech industries.

The Chinese government also lifted retaliatory restrictions on exports of gallium, germanium, antimony, and other so-called superhard materials such as synthetic diamond and boron nitride. These measures, introduced in December 2024, were widely seen as a response to the US government’s expanded restrictions on semiconductor exports to China.

Still, economists at Morgan Stanley said Beijing had not lifted the export control framework it introduced in April and was likely to maintain “adjusted choke points” to maintain leverage.

Given the continued strategic conflict, “we think rolling negotiations, temporary escalation, and policy asymmetry will be the new equilibrium,” the economists said.

China is also developing a so-called “verified end user” system (VEU) to block rare earth exports to companies with ties to the U.S. military, the Wall Street Journal reported Tuesday, citing anonymous sources.

If the system is strictly implemented, it could make it more difficult for auto and aerospace companies, which serve both civilian and defense companies, to import certain Chinese materials, the magazine reported.

The Chinese government on Monday added 13 fentanyl precursors to its export control list, requiring permits for shipments to the United States, Mexico and Canada.

The Department of Commerce also suspended sanctions against five U.S.-affiliated subsidiaries of South Korean shipbuilding company Hanwha Ocean for one year, and the Department of Transportation suspended measures such as port fees targeting the U.S. shipping sector. The Office of the U.S. Trade Representative announced Sunday that it would suspend its own measures for one year.

The White House announced that as part of the bilateral agreement, China has agreed to purchase 12 million tons of soybeans by the end of this year and 25 million tons annually over the next three years. The Chinese government has not confirmed these figures, but appears to have recently resumed buying soybeans from the United States after refraining from buying them for much of this year, Reuters reported.

“While these measures suggest ‘so far so good,’ this is actually just the beginning,” said Wendy Cutler, senior vice president at the Asia Society Policy Institute. Although both sides had incentives to maintain a ceasefire, such “moves for detente tend not to last,” she added.

China’s economy, weighed down by a prolonged trade war with the United States, grew 4.8% in the third quarter, the slowest growth in a year and down from 5.2% in the second quarter.

In a notice on Monday, China’s State Council announced 13 measures to encourage private investment in several key state-led industries.

Neil Thomas, a China politics researcher at the Asia Society, said at last month’s Supreme Economic Conference that China’s push for independence amid “fierce international competition” showed its leadership was tying its growth goals more closely to strategic competition with the United States.

“The Chinese government is not pursuing a big deal, but is seeking a ceasefire to buy time and build influence,” Thomas added. He added that while the United States and China prioritize self-reliance over interdependence, Xi is betting his strategic resolve will outlast Trump’s.