Calculated concessions: How is the U.S. redefining economic engagement with China?

Editor's Note: Sun Taiyi is an associate professor of political science at Christopher Newport University in the United States. He is also the executive editor of the Global Forum of Chinese Political Scientists' main publication, Global China. The article reflects the author's opinions and not necessarily those of CGTN.

In recent months, the trajectory of U.S.-China trade negotiations has once again drawn global attention. While the official discussions have focused on tariffs, exports and market access, what's arguably more telling is what has not occurred – and what that absence reveals about the strategic calculations behind each side's behavior.

The headline outcome – the extension of the trade truce for another 90 days, pending President Donald Trump's approval – was widely expected. It lays the groundwork for a potential leaders' summit this fall and signals a tentative step toward stabilizing bilateral relations. After a period of tit-for-tat tariff escalations, the Trump administration appears to have recognized that a prolonged tariff war would inflict mutual harm. Beyond retaliatory duties, U.S. officials have become increasingly wary of China's potential use of export controls on critical materials such as rare earth elements – essential to multiple U.S. industries. These considerations have tempered Washington's approach, even as Trump maintains a preference for leveraging tariffs in international negotiations.

Still, progress beyond this point will be far more difficult. The initial and relatively manageable phase of reducing about 115 percent in mutual tariffs was already completed during the Geneva talks. Follow-up negotiations in London helped clarify technical details. However, each new step forward now demands greater political capital and economic compromise.

Notably, the talks have been accompanied by a conspicuous de-escalation in areas that might otherwise provoke diplomatic friction. On Taiwan, for instance, the Trump administration reportedly intervened to prevent Lai Ching-te from stopping in New York City en route to South America. This followed the quiet cancellation of Wellington Koo's planned meeting with Pentagon officials. Meanwhile, a pending U.S. arms shipment to the region has been delayed. These moves suggest the White House is eager to avoid disruptions to the trade dialogue.

Similar caution has been evident on the technological front. Just before lifting export restrictions on AI semiconductors to China, the U.S. Commerce Department softened its language in guidance related to Huawei-made chips. This adjustment was made despite vocal opposition from lawmakers on both sides of the aisle. The overarching signal is clear: the Trump administration does not want anything to derail the path to renewed engagement, particularly as President Trump seeks a high-profile summit with Chinese leadership following his reelection.

Yet beneath these signs of goodwill lie persistent structural challenges. The United States continues to press for substantial concessions – greater access to Chinese markets, improved treatment of U.S. firms operating in China, and tighter Chinese cooperation on transnational issues such as fentanyl precursor control. These demands are politically and economically difficult for Beijing to accommodate in full. Thus, even as both sides express interest in a comprehensive trade deal, the path forward remains steep and uncertain.

In many cases, the United States' strategy has led to framework deals with other economies that later diverge in interpretation. Foreign governments often view these agreements differently than U.S. officials, raising doubts about the clarity and enforceability of such deals. More importantly, with the Trump administration potentially entering its final stretch, the perceived credibility of enforcement is weakening. Many countries are thus opting for short-term tariff relief without committing to the full slate of U.S. demands – highlighting a transactional pattern of diplomacy rather than long-term institutional engagement.

Meanwhile, broader trends in global trade are beginning to shift. The retreat from post-World War II economic integration is accelerating, and unless major economies take deliberate steps to reverse this tide, the damage may prove lasting.

Domestically, the trajectory of U.S. trade policy will be shaped in large part by economic fundamentals – particularly inflation. Early in the trade war, U.S. companies were still clearing inventory, and low global energy prices helped shield consumers from inflationary spikes. But as the holiday shopping season approaches, the cumulative impact of tariffs is likely to become more visible at the consumer level. Should economic conditions worsen rapidly, the Trump administration may be compelled to strike deals – especially with China – to mitigate political fallout and preserve its economic credibility.

For its part, China should continue to seek common ground with the United States while managing differences pragmatically. But it must also seize the opportunity to strengthen ties with other countries – especially those that have grown disillusioned with Washington's heavy-handed trade tactics. These include not only developing economies but also U.S. allies such as Japan, Australia and the European Union.

By doing so, China stands to gain economically and diplomatically. More importantly, it can position itself as a responsible global actor committed to upholding a rules-based international order and advancing the vision of a community with a shared future for humanity.