U.S.-China gestures hint at calm — but the rivalry still runs deep

While the US-China trade truce appears to be holding up, analysts warn that detente remains fragile in a rivalry increasingly defined by strategic rivalry.

A series of decisions outlined in the comprehensive trade deal U.S. President Donald Trump reached with Chinese leader Xi Jinping last month took effect Monday, rolling back steep tariffs and export controls.

The United States halved fentanyl-related customs duties on imports from China to 10 percent and extended the ceasefire, which reduced the mutual tariff rate from 34 percent to 10 percent, for one year.

In response, China’s Ministry of Commerce rolled back some export restrictions on critical minerals and rare earth materials to the United States on Monday. The restrictions, first implemented on October 9, targeted materials vital to military hardware, semiconductors and other high-tech industries.

Beijing also reversed the limits of retaliation regarding the export of gallium, germanium, antimony and other so-called superhard materials such as synthetic diamonds and boron nitrides. These measures, implemented in December 2024, were widely seen as a response to Washington’s expanded semiconductor export restrictions on China.

Still, Morgan Stanley economists said Beijing is not loosening the export control framework it introduced in April, likely maintaining a “calibrated chokehold” to maintain leverage.

Given the ongoing strategic competition, “we see ongoing negotiations, periodic flare-ups and policy asymmetry as the new equilibrium,” economists said.

China is also reportedly developing a so-called “verified end user” system, or VEU, to block rare metal exports to companies with ties to the US military. The Wall Street Journal reported Tuesdayquoting anonymous sources.

If strictly enforced, the system could make it harder for automotive and aerospace companies, both civilian and defense customers, to import certain Chinese materials, the Journal reported.

As part of the bilateral agreement, China agreed to purchase 12 million metric tons of soybeans by the end of this year and 25 million metric tons annually for the next three years, the White House said. Beijing, which has not confirmed these figures, appears to have recently resumed purchasing soybeans from the United States. According to Reutersafter avoiding them for most of this year.

“These steps suggest ‘so far so good,’ but in reality, this is just the beginning,” said Wendy Cutler, senior vice president of the Asia Society Policy Institute. He added that while there are incentives for both sides to maintain the ceasefire, such “de-escalation moves tend to be short-lived.”

China’s economy, under pressure due to the protracted trade war with Washington, grew by 4.8 percent in the third quarter; This was the slowest in a year and lower than the 5.2 percent in the second quarter.

In a statement released Monday, China’s State Council 13 measures were announced Encouraging private investment in some major industries dominated by the state.

Neil Thomas, who studies China policy at the Asia Society, told the top economic meeting last month that China’s push for self-sufficiency amid “fierce international competition” was a sign that the leadership was tying its growth goals more closely to strategic competition with the United States.

“Beijing is not looking for a grand bargain [but] “We are seeking a ceasefire to buy time and gain leverage,” Thomas added, adding that Xi is betting that his own strategic resolve will outlast Trump’s as both Washington and Beijing prioritize self-reliance over interdependence.