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In this episode of China Considered Quick Takes, Elizabeth Economy analyzes the recent US-China trade framework agreement. She breaks down what’s in the deal — soybeans, fentanyl precursors, TikTok, and tariff adjustments — and explains why it’s a positive step forward.
However, she emphasizes that this is not a fundamental reset: structural issues like industrial subsidies, market access barriers, and technology competition remain unaddressed. While the agreement may ease tensions and stabilize the bilateral trade relationship in the near term, the deeper strategic competition between the US and China continues.
Transcript
Welcome to another episode of China Considered Quick Takes. I’m Liz Economy, Hargrove Senior Fellow and co-director of the program on the U.S, China, and the World at the Hoover Institution.
So today, we have some good news. It looks like the United States and China have reached a framework trade agreement that covers most of the issues that they’ve been negotiating over the past several months.
This means that China’s not going to place new export controls on rare earths or rare earth magnets that the United States needs for its defense and technology industries.
It also means that China’s going to buy more soybeans from US farmers. And it probably means that China is going to take more actions to try to control the export of the precursor chemicals that are needed for fentanyl, the opioid that caused the death of almost 50,000 Americans last year.
On the US’s part, it means that Washington is not going to impose another 100% tariff on all Chinese exports. It also means that it’s likely to reduce or even eliminate the special 20% tariff that it put on earlier because of China’s fentanyl trade.
And it means the United States is probably not going to launch a 301 investigation into how well China is implementing, or not implementing the Phase One trade deal that it signed during the first Trump administration.
Both sides also agreed to take a step back from the fees that they’d been placing on the other ships when they were docking in their ports, and it looks like we’re very close to signing a deal on TikTok.
All of this is to say that this is a good reset in the US-China trade relationship. It’s likely to help stabilize the overall bilateral relationship, at least in the near term, and it’s important for easing pressures on the global economy.
But what is this trade deal not going to do?
I think this trade deal is not, as President Trump has suggested, a fantastic win for the United States. With the exception of fentanyl and TikTok, this trade deal basically takes us back to the pre-Trump trade war status quo. It helps dig us out of the hole that the Trump administration dug when it first launched the trade war. Take, for example, soybeans. In 2024, the United States exported $12 billion worth of soybeans to China. This year, our farmers have sold only about $3 billion worth. Now, if we’re lucky, this trade team has negotiated at least $9 billion worth of orders. But again, does that constitute a big win? No. It just takes us back to what we had before the Trump administration took us on this roller coaster.
This trade deal also doesn’t deal with some very specific and important problems that are being faced by a number of our companies. The Chinese government, for example, has launched investigations into a number of our most important technology companies, Nvidia, Qualcomm, Micron, potentially now Intel. These investigations scare away Chinese consumers and close off the Chinese market to our companies. This is an important mechanism that China uses to accomplish a market closing.
Third, This trade deal doesn’t deal with the fundamental structural issues in the US-China bilateral trade relationship. China’s export of its overcapacity, its subsidies, its cyber-economic espionage, the non-tariff barriers that it puts in place to make competition for American and other multinationals much more difficult inside China.
Hopefully this comes in a round two trade deal. But for now, we’re not getting at the fundamental issues that would actually lead to a balanced, free, fair trade relationship that could be sustained over the long term.
Finally, I don’t think this trade reset is a signal of an overall reset in the US-China relationship. I just read a piece by Ben Smith of Semafor, in which he suggests that the trade deal marks the end of the hawkish China approach that had been adopted by the first Trump administration, the Biden administration, and by many members of Congress. I just don’t see the evidence for this. I know it’s become a popular narrative, but President Trump just announced the decision to go full steam ahead with AUKUS, the Australia-UK-US deal on nuclear submarines. We’ve also seen members of this administration flying all over the world to secure new deals on critical minerals and rare earth elements in an effort to reduce our dependence on China.
I think when it comes to technology, when it comes to national security, this administration is all systems go on competition with China. But I’ll make the case for that in my next China Considered quick take. So thank you for listening, and make sure to hit the subscribe button, and tune in next time.
Elizabeth Economy is the Hargrove Senior Fellow at the Hoover Institution. Named by Politico as among “the ten names that matter in China policy,” Economy served as senior adviser for China in the US Department of Commerce in 2021–23 and is the author of several influential books on Chinese politics and policy, most recently The World According to China.