U.S. President Donald Trump’s unwarranted global tariff war, which began on April 2, 2025, with steep 145 percent tariffs on China, alerted economists to unforeseen global consequences. As China’s economy relied heavily on manufactured goods, and with the U.S. as its largest export destination, the Trump administration believed that imposing tariffs could weaken China and compel it to comply with its terms and conditions. Beijing, well-prepared in advance, proved this belief wrong. China’s resolute response within weeks forced the U.S. to enter negotiations, which took place from May 10 to 12 in Geneva, in which the two sides agreed to suspend tariffs for 90 days. The success of Beijing’s policy relied on several factors.

The recent China-U.S. economic and trade talks have helped ease trade tensions between the world’s two largest economies. Tariffs have been reduced significantly, lifting the pessimistic mood. However, a sustainable trade agreement has not yet been sealed.

China’s new export licensing system strengthens its control over key rare earth elements, deepening supply chain risks. Although new processing facilities are emerging abroad, they won’t soon offset China’s dominance, prolonging global uncertainty.

To Donald Trump’s surprise, China showed no fear of tariffs. Instead, it launched a powerful tit-for-tat counteroffensive that caused the United States to back off. Trump’s pattern of bullying, his obsession with bellicose showmanship, his love of flattery and his attempts to instill fear are on display for all to see.

Since his return to the White House, Donald Trump has attempted to reduce the U.S. focus on Europe in order to shift resources to the Indo-Pacific. But geopolitical rivalry can neither resolve America’s own problems nor the challenges facing the world.

A trade deal between China and the United States is nowhere in sight. The mountain of issues could take a long time and enormous effort to resolve. It’s certainly not going to happen in three or four weeks, as Trump has suggested. More likely, it will be months, if not years.

Donald Trump’s “reciprocal tariff” policy is intended to push back against globalization, but its inherent structural problems will only accelerate the trend of “de-Americanization” worldwide.

Tariffs and a trade war are definitely going in the wrong direction. Trump and his team should cast aside all illusions that China will capitulate and that the U.S. can survive the tariff war. The only wise choice is to dump the tariffs and come to the table for talks.

Speculation about a "Grand Bargain" between Trump and Xi persists, but deep divisions within Washington, Trump’s erratic leadership, and Beijing’s long-term strategic patience make a major breakthrough unlikely. Even if a meeting occurs, structural mistrust and political instability on both sides suggest any deal would be fragile at best.

The tech rivalry between China and the United States is fast becoming a key variable in the trajectory of relations. It not only reflects divergent innovation paths but fundamentally reshapes the global technological order.