U.S.-China Trade Talks – A Deal in Name, Not in Nature

After a grueling period of diplomatic stalemate and escalating tariffs, the United States and China have finally sketched the outlines of a new trade agreement. The announcement of a tentative framework, set to be finalized at an upcoming Trump-Xi summit in South Korea, has momentarily halted a dangerous slide toward a full-blown economic conflict. On the surface, this is a cause for relief. But beneath the veneer of progress, a deep and warranted skepticism persists. Given President Donald Trump’s established playbook, this “deal” is less a peace treaty and more a tactical pause—one that is likely to be shattered by the next round of threats.

The Key Developments: A Closer Look at the Terms

The preliminary framework addresses several pain points, but each comes with its own set of caveats and unresolved tensions.

The Framework Agreement: While “structure” and “framework” sound promising, they are deliberately vague terms. The real battle over enforcement mechanisms, timelines, and measurable benchmarks is being kicked down the road to the October 30th summit. This leaves ample room for last-minute brinksmanship.
The Tariff Pause: The U.S. has shelved its threat of 100% tariffs on key Chinese imports. However, the existing web of Section 301 tariffs—amounting to hundreds of billions of dollars—remains firmly in place. This is not a rollback; it’s a threat held in reserve, providing immediate leverage for the U.S. in future disputes.
A Lopsided Compromise on Rare Earths & Tech: China’s decision to delay its expanded controls on rare earth minerals is a significant, if temporary, concession. These elements are the lifeblood of the U.S. tech and defense industries, and China dominates the global supply. However, this move highlights the fundamental asymmetry of the conflict: China is withholding a strategic weapon, while the U.S. is merely pausing the application of a new one. On broader technology restrictions, including those on semiconductors and export controls, both sides have dug in their heels, signaling that the core technological cold war is far from over.
Agricultural Purchases & Fentanyl: China’s promised increase in purchases of American soybeans and other agricultural goods is a classic, repeatable concession that helps Trump placate his key political base in the Farm Belt. Similarly, the U.S. demand for stricter Chinese controls on fentanyl precursor chemicals appeals to domestic concerns about the opioid crisis. While economically and politically beneficial, these are side issues that do not address the foundational disputes over intellectual property theft, state subsidies, and market access.

Market Reaction: A Sigh of Relief, Not a Victory Cheer

The financial markets responded with cautious optimism, not euphoria. The slight dip in gold prices reflects a minor reduction in the “fear trade” as immediate risks subside. However, equities and currencies did not skyrocket. Investors have been burned before by false dawns in this trade war. The muted reaction indicates that the market is treating this as a temporary de-escalation, not a fundamental resolution. The underlying volatility and uncertainty remain priced in.

The Inevitability of the Next Threat: A Pattern of Behavior

The primary reason for skepticism is not the text of the deal, but the man who will sign it. President Trump has a well-documented and consistent pattern of behavior when it comes to international agreements:

Create a Crisis: Use maximalist threats (e.g., 100% tariffs) to create urgency and dominate the news cycle.
Announce a “Deal”: Declare a historic victory and secure a photo opportunity, often based on a fragile preliminary understanding.
Undermine the Agreement: Shortly after, publicly complain that the other side is not living up to the “spirit” of the deal or claim the terms were insufficient.
Re-escalate: Introduce new threats or tariffs to restart the cycle, maintaining constant pressure and leverage.

This happened with the USMCA, which he later threatened to tear up. It happened with the Phase One deal with China, which he consistently criticized after the fact. There is no reason to believe this time will be different. For Trump, the threat of trade war is a more potent political tool than the peace it supposedly brings.

Furthermore, his political strategy relies on having a clear adversary. A confrontational stance against China is one of the few issues that unifies his base. Completely resolving the conflict would mean surrendering a powerful political cudgel. The incentive structure dictates not peace, but managed and perpetual conflict.

Conclusion: A Deal in Name, But a Weapon in Practice

While the tentative framework offers a glimmer of hope and a necessary respite from escalating tensions, it is a mirage of lasting peace. The structural issues between the U.S. and China are profound and cannot be solved in a single agreement. More importantly, the Trump administration’s modus operandi suggests that even a signed deal will not be the final word.

The agreement itself may become a new weapon—a benchmark against which China will be publicly measured and found wanting, justifying the next round of pressure.

The bottom line: A deal may be inked in late October, but don’t expect the ink to dry before the tweets and threats begin anew. The turbulence is not a bug in the Trump trade strategy; it is its defining feature.