After months of escalating tariffs, heated rhetoric and threats of mutual economic damage, negotiators from Washington and Beijing emerged from two days of talks in Geneva this week with a shared announcement: a 90-day pause in most U.S. and Chinese duties. At first glance, the agreement represents a remarkable thaw in what had become a bitter confrontation between the world’s two largest economies. Yet beneath the headlines of truce lies a complex backdrop of unresolved disputes, strategic jockeying and simmering tensions that suggest this trade war is far from finished.

When U.S. Treasury Secretary Scott Bessent and Vice Premier Liu He convened in Switzerland, neither side had the luxury of backing down. For months, China’s leadership resisted U.S. demands for sweeping structural changes to its industrial policies, while the Trump administration pressed ahead with successive rounds of tariffs designed to force Beijing’s hand. The result was a dramatic intensification of economic pain for exporters and manufacturers on both sides: U.S. agricultural shipments stalled, European factories felt the ripple effects and China’s export-oriented provinces began to show signs of strain.

In Geneva, negotiators agreed to roll back U.S. levies on $250 billion of Chinese goods from 30 percent to 15 percent and trim Beijing’s duties on $110 billion of U.S. exports from 25 percent to 10 percent through mid-August. The deal is narrowly tailored—excluding proposed levies on autos and medical products—but it offers a temporary reprieve for companies that had been forced to grapple with sharply higher input costs, disrupted supply chains and stalled inventories.

Yet the adjustment is merely tactical. As Treasury Secretary Bessent acknowledged at a joint news conference, “This 90-day pause is designed to give both sides time to resume deeper discussions. It’s not a permanent resolution.” In Beijing, the Commerce Ministry struck a similar tone, calling the agreement an “important step to bridge differences” while warning that China “will not tolerate unilateral tariff hikes” over the long run.

Economic Pressures and Political Constraints

China’s willingness to engage in Geneva reflects mounting domestic pressures. Data released just before the talks showed that industrial output growth slowed to its weakest clip in over a year, while consumer inflation dipped into negative territory for the third consecutive month. Youth unemployment in major cities remained stubbornly high, even as local governments rolled out stimulus measures to prop up housing and infrastructure. At the same time, mounting corporate layoffs in export hubs such as Guangdong and Zhejiang underscored the risk that continued standoffs could tip the economy into deeper contraction.

For the United States, the calculus has its own complexities. President Trump has built a reputation on confronting China’s trade practices, from forced technology transfers to state­-subsidized “champions.” Yet the president faces a looming midterm election, and sustained economic disruption—whether in the farm belt or the auto sector—could translate into political headwinds. The U.S. business community, including major manufacturers and agricultural producers, has grown increasingly vocal about the collateral damage of indiscriminate tariffs.

Structural Issues Remain Unresolved

The Geneva agreement leaves untouched many of the fundamental disagreements that triggered the dispute. Beijing has declined to commit to sweeping reforms of its subsidy programs for steel, aluminum and lithium-ion batteries—sectors where state-backed firms enjoy a dominant, low-cost advantage. The United States, for its part, still seeks enforceable guarantees on intellectual property protections and greater reciprocal market access for foreign technology firms operating in China.

Perhaps most contentious is China’s role in emerging digital and manufacturing standards. As Beijing pushes to lead in 5G, artificial intelligence and next-generation semiconductors, the United States has accused Chinese entities of leveraging state resources to undercut competitors abroad and achieve global dominance. Technology “decoupling”—the gradual separation of U.S. and Chinese tech ecosystems—remains on the table as a strategic option should negotiations falter.

Beyond commerce, the two powers are jostling for strategic influence on multiple fronts. Tensions in the South China Sea, disputes over Hong Kong’s autonomy and differences on human-rights issues in Xinjiang have all added friction to the bilateral relationship. The United States has imposed sanctions on Chinese officials and entities for alleged human-rights abuses, while China has responded with measures targeting U.S. NGOs and tightening controls on foreign media.

These geopolitical undercurrents complicate trade talks by linking economic concessions to broader questions of national interest. Beijing’s leadership, mindful of domestic nationalism, cannot be seen as capitulating to pressure without securing tangible wins. Likewise, U.S. negotiators must balance demands for fairer trade with concerns about preserving strategic advantages in critical industries.

Next Steps and Potential Pitfalls

Over the coming weeks, officials on both sides will undertake more intensive technical work to flesh out the contours of any lasting agreement. Joint working groups are expected to tackle issues ranging from currency practices and agricultural purchases to intellectual-property enforcement and state-ownership limits. Progress in Geneva gives these groups a window to operate, but time is short: the 90-day truce expires on August 12, after which tariffs could rebound to their prior heights within days.

Market reactions highlight both optimism and caution. Stock indexes in the United States and Asia tumbled when the dispute first escalated, then rebounded strongly on news of the pause. Yet many corporate treasurers and supply-chain managers continue to hedge against renewed volatility by diversifying sourcing away from China and building buffer inventories. A full resolution, they say, will require not only tariff reductions but also a credible roadmap for structural reform in sectors that China deems strategic.

Observers note that China’s leadership has long approached economic contests with patience and resilience. The government has weathered previous trade disruptions—after joining the World Trade Organization in 2001, for example, China absorbed massive shocks to its domestic industries and adjusted policy levers over time. Today, its state-led fiscal and monetary tools allow for targeted stimulus to keep employment and social stability intact, providing Beijing with the capacity to endure short-term pain.

Nevertheless, that endurance has limits. Extended tariff skirmishes can erode the confidence of entrepreneurs and foreign investors, leading to slower productivity growth and reduced capital inflows. With its “dual circulation” strategy emphasizing domestic consumption and homegrown innovation, China cannot afford prolonged headwinds to either domestic demand or technological advancement.

U.S. Leverage and Strategy

For the United States, leverage comes from being a premier destination market and technology partner. American firms collectively accounted for over $1.3 trillion in goods shipped to China last year, from agricultural products to aircraft engines. Moreover, U.S. leadership in software, pharmaceuticals and advanced manufacturing gives it negotiating power in areas that China covets for its modernization drive.

Yet Washington must wield that leverage judiciously. Excessive pressure risks further decoupling, which could undermine U.S. companies’ competitiveness and fragment global technology standards. Finding a path that protects core American interests—such as intellectual property rights and national security—while allowing for continued collaboration on shared challenges like climate change and public health remains a delicate diplomatic task.

What Lies Ahead

The Geneva pause represents a critical but precarious milestone. Both sides have momentarily stepped back from the brink, acknowledging that an all-out economic rupture would serve neither party’s long-term interests. But the fundamental clash over global trade architecture, technology leadership and geopolitical influence remains unresolved. As negotiators return to their capitals to report on progress and refine proposals, the world watches to see whether this temporary truce can evolve into a durable framework—or whether the next round of tariffs will resume the very disruptions the talks sought to avert.

For now, China has come to the table, signaling a willingness to engage. But with structural reforms left hanging and strategic rivalries still heating up across multiple arenas, this fight is far from over.

(Adapted from BBC.com)