US-China Trade War 2025: Geneva Agreement and Diplomatic Volatility
Mahasiswa S-1 Hubungan Internasional Fakultas Ilmu Sosial dan Ilmu Politik, Universitas Sebelas Maret
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Tulisan dari Annisa Saphira Cessaria Prabowo tidak mewakili pandangan dari redaksi kumparan
PerbesarIntroduction
The United States-China trade relationship in 2025 has been characterized by unprecedented volatility, marked by dramatic escalations and rapid de-escalations that have profound implications for global economic stability. The trade talks in Geneva between the United States and China yielded greater-than-expected de-escalation in the ongoing trade war, yet subsequent developments have revealed the fragile nature of bilateral economic diplomacy between the world's two largest economies.
The year began with President Donald Trump's trade war with China that began in his first administration has snowballed into greater tensions between the world's biggest economies. By April 2025, tariff rates had reached extreme levels, with U.S. levies on Chinese goods will drop from at least 145% to a base levy of 30% for an initial period of 90 days, while Chinese levies are set to fall from at least 125% to 10% on U.S. goods following the Geneva negotiations. This dramatic oscillation between economic warfare and diplomatic accommodation reflects deeper structural tensions in the bilateral relationship that extend beyond mere trade disputes.
The Geneva Agreement: Temporary De-escalation
The breakthrough came in May 2025 when The United States will (i) modify the application of the additional ad valorem rate of duty on articles of China by suspending 24 percentage points of that rate for an initial period of 90 days. The agreement, reached after intensive weekend negotiations in Switzerland, represented the first significant de-escalation since the trade war's dramatic intensification in early 2025.
The talks were led on the Chinese side by Vice Premier He Lifeng and on the U.S. side by Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent. The mutual tariff reductions brought rates down to near pre-escalation levels, effectively ending what amounted to a mutual trade embargo that lasted for 39 days.
The agreement included provisions beyond tariff reductions. China will remove the retaliatory tariffs it announced since April 4, 2025, and will also suspend or remove the non-tariff countermeasures, particularly concerning rare earth minerals essential for U.S. semiconductor and defense industries. Additionally, The United States and China will take aggressive actions to stem the flow of fentanyl and other precursors from China to illicit drug producers in North America.
Breakdown and Renewed Tensions
Despite initial optimism, the Geneva framework quickly encountered implementation challenges. By late May 2025, Trump did not specify in his post how China had violated the agreement made following trade talks in Geneva, Switzerland, in mid-May or what action he planned to take at their alleged failure to comply with its terms. The core dispute centered on China's perceived slow response to easing rare earth export restrictions, which China also agreed to lift trade countermeasures restricting exports of critical metals needed for production by US semiconductors, electronics and defence industries.
China on Monday refuted Washington's claims that it had broken the Geneva trade agreement, instead accusing the U.S. for breaching deal terms. Beijing's position was that it had "strictly implemented and actively upheld" the agreements, citing its steps to cancel and suspend certain tariff and non-tariff measures announced in April. This mutual recrimination demonstrated the fundamental interpretative differences between the two sides regarding implementation timelines and specific obligations.
Diplomatic Efforts and Structural Challenges
The volatility in trade relations reflects deeper strategic competition between the United States and China. While comparisons to the Cold War abound, U.S.-China relations are marked by deep economic interdependence and shared global responsibilities features absent in the U.S.-Soviet rivalry. However, competition has intensified across almost every domain: military, economic, technological, and ideological.
The economic interdependence creates both incentives for cooperation and vulnerabilities that can be weaponized. The U.S.-China trade and investment relationship has become more and more fraught over the last decade now. It is poised to get even more contentious as long as Xi continues to dump China's advanced industrial exports onto world markets. This fundamental structural issue complicates any temporary agreements like the Geneva framework.
Technology remains a particular flashpoint. Washington's technology sharing restrictions have accelerated Beijing's domestic technological innovation. In January 2025, Chinese startup DeepSeek launched one of the world's most advanced AI models, demonstrating China's capacity for technological self-reliance despite U.S. export controls.
Global Economic Implications
The trade war's volatility has had significant global repercussions. The World Bank on Tuesday slashed its global growth forecast for 2025 by four-tenths of a percentage point to 2.3%, saying higher tariffs and heightened uncertainty posed a "significant headwind" for nearly all economies. The uncertainty has forced companies worldwide to reconsider supply chain strategies and investment decisions.
The agreement's temporary nature and subsequent breakdown have undermined confidence in both countries' commitment to stable economic relations. Trump administration officials can attempt to frame the trade talk as achieving the goal of "strategic decoupling." In reality, they have lost their credibility and given China more leverage. This credibility deficit extends beyond bilateral relations to affect global economic governance.
Regional Impact and Third-Party Responses
The trade tensions have forced regional actors to navigate between the two superpowers carefully. On April 14-15, 2025, Chinese President Xi Jinping embarked on a high-profile visit to Vietnam, marking his second trip to the country in less than eighteen months, as part of China's efforts to strengthen regional partnerships amid U.S. tensions. Amid U.S.-China trade tensions, with 145 percent U.S. tariffs and recently 245 percent on Chinese goods and 49 percent on Cambodian exports, the visit strengthens the "ironclad friendship" between Cambodia and China.
These diplomatic initiatives reflect China's strategy to maintain regional influence despite trade pressures from Washington. Southeast Asian nations have been particularly affected, forced to balance economic ties with China against security partnerships with the United States.
Conclusion
The 2025 U.S.-China trade relationship exemplifies the challenges of managing great power competition in an interconnected global economy. While the Geneva Agreement demonstrated both sides' capacity for pragmatic compromise, its rapid deterioration reveals the structural impediments to sustained cooperation. The 90-day framework, though extended through subsequent negotiations, highlighted the fundamental tension between economic interdependence and strategic rivalry.
Most of all the United States and China owe it to their peoples and the world to avoid a catastrophic war. How they manage their relationship over the next decade will be of enormous consequence for the future of humanity. The volatility in trade relations reflects broader uncertainties about whether the two powers can establish stable coexistence frameworks.
The pattern of escalation, temporary de-escalation, and renewed tensions suggests that trade relations will remain subject to broader geopolitical dynamics. Future stability will require both sides to develop mechanisms that can withstand political pressures and implementation disagreements. The Geneva experience demonstrates both the potential for rapid diplomatic progress and the fragility of agreements that lack robust institutional frameworks for dispute resolution.
As both economies continue to evolve, with China pursuing technological self-reliance and the United States seeking to maintain strategic advantages, the trade relationship will likely remain characterized by cycles of confrontation and accommodation rather than stable cooperation. The global economy's resilience will depend on both powers' ability to prevent their strategic competition from derailing essential economic interactions.