The United States and China have announced a new agreement aimed at reducing trade tensions that have escalated in recent years. This announcement follows a year of both countries trading bilateral complaints over export controls. The contention even bled into technology sector subsidies. On June 11, President Trump announced the broad outline for this agreement following high-level discussions in London.
China had previously expressed its concerns over U.S. restrictions on advanced technology exports. It considers these constraints to be detrimental to its competitive prosperity. The U.S. was concerned that China was engaging in a form of industrial policy, unfairly subsidizing its tech companies. It further accused China of requiring foreign companies to provide sensitive technology in return for market access.
It’s a promise that both countries are taking very seriously. They will create a free trade area, eliminating or significantly scaling back the tariffs they had previously raised on each other’s products. This bilateral action aims to reduce the regulatory burden on companies and individuals alike. It takes square aim at the escalating, Trump-fueled wave of trade disputes.
On Friday, China’s Commerce Ministry confirmed that they have come to little more than an understanding. They shared almost no information at all about what exactly is included in the deal. The ministry responded with a commitment to adhering to legal procedures. They are determined to review and approve export applications for controlled, militarily-relevant items.
“Silence regarding the terms suggests that there is less substance to the deal than the Trump Administration implies,” noted Jeff Moon, a former U.S. trade official. This skepticism reflects ongoing uncertainties about the concrete outcomes of the negotiations.
The deal leaves China two options to enforce its policies – market manipulation and administrative controls. These materials are critical to most manufacturing processes—with a major bottleneck being in the production of microchips. In past years, China had already been injecting new barriers into these materials through increasing trade tensions with the Trump administration.
The move follows widespread condemnation of announced plans by the U.S. to revoke visas for Chinese students enrolled at American colleges and universities. This important decision alarmed and outraged educational leaders across the country.
“What we’re seeing here is a de-escalation under President Trump’s leadership,” stated Bessent, highlighting a potential shift in the dynamics of U.S.-China relations.
Nevertheless, these moves bring up big questions about whether the U.S. will ease its own controls on advanced technology exports to China. The Chinese Commerce Ministry failed to shed light on this fundamental question, opening up crucial uncertainty over their nascent trade policy.
Scott Kennedy, a trade expert, emphasized that “if the two sides can implement these elements of the ceasefire, then they could begin negotiations on issues which generated the initial escalation in tensions in the first place.” This new outlook highlights the need for ongoing conversation to address outstanding issues and promote collaboration between the two countries.
This deal was a product of the trade war President Trump started during his first term. To do so, extensive tariffs were enacted on numerous Chinese products. This strategy was characterized by Trump as a “direct and blatant attack on our country,” aiming to protect American industries from foreign competition.
As both countries work towards implementing the terms of this new agreement, stakeholders in various sectors are closely monitoring developments. The result of this stakeholder engagement may have long-term effects on the future of cross-border data flows and customs practices worldwide.
