The art of no deal: Why Trump and Xi both blinked on tariffs, Plus US finds rogue tech 👀 in China's 'clean energy' panels -- China Boss News 5.16.25

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What happened?

After months of economic brinkmanship, the U.S. and China have agreed to a 90-day tariff rollback, halting what had become a spiraling trade war.

Announced on May 12, 2025, following secret negotiations in Geneva, the deal slashes tariffs on both sides by 115 percentage points.

U.S. levies on Chinese imports drop from 145% to 30%; China’s fall from 125% to 10%.

Markets responded with euphoria: Dow futures jumped 2%, the Nasdaq climbed over 3.5%, and Hong Kong’s Hang Seng surged.

Trump branded it a “total reset,” with the Whitehouse captioning its press release in all caps, “ART OF THE DEAL.”

Chinese media hailed it as a “strategic triumph,” with some state voices mocking the U.S. for “chickening out.”

But behind the celebratory spin is a harsher truth: both sides blinked.

And the agreement is merely a ceasefire—not a peace treaty.

Why It Matters

Defining victory amid mutual pain

U.S. GDP had begun to contract under the weight of rising import costs and plunging consumer confidence.

Meanwhile, collapsing exports and factory slowdowns were threatening political stability in China.

In other words, the deal reflects mutual economic strain—not mutual trust.

China agreed to suspend retaliatory measures such as rare earth export curbs and blacklists on U.S. firms.

In return, Washington preserved its 20% fentanyl-related tariff and held out the possibility of further reductions—conditional on Beijing’s cooperation on narcotics enforcement and trade commitments reminiscent of Phase One-era purchase agreements.

The groundwork was laid weeks earlier in an IMF basement, where U.S. Treasury Secretary Scott Bessent met with China’s finance minister.

Momentum built quickly from there.

“Both sides were more economically boxed in than they let on,” Craig Singleton at the Foundation for Defense of Democracies told Financial Times.

For chest-thumping nationalists, the question was simple: Who blinked first?

But a deeper reading reveals how both the concessions—and the manner in which they were made—are likely to shape future confrontations.

A summary of what each side got

🇺🇸 Trump’s Wins

• Short-term relief: Tariffs drop from 145% to 30%, easing pressure on U.S. businesses and consumers.

• Political optics: Trump claims a “victory” for his hardball tactics—without conceding leverage.

• Strategic tools preserved: Fentanyl-linked tariffs remain in place. Purchase agreements on agricultural or energy products, like in earlier "phase one" trade talks, may follow.

• De minimis closure upheld: Trump’s earlier termination of the under-$800 tariff exemption hit Chinese e-commerce giants Temu and Shein hard, with shipments now facing duties of 120% or more. Though parcel tariffs were later reduced to 54%, the exemption itself was not reinstated—raising costs and prompting both companies to pivot toward U.S. warehousing and European markets.

🇨🇳 Xi Jinping’s Gains

• Tariff relief without concessions: Beijing gave little ground on structural issues, yet walked away with a tariff rate comparable to that of U.S. allies.

• Preserved sovereignty: There was no agreement on state subsidies, IP enforcement, or forced tech transfers.

• Global posture intact: China used the standoff to deepen trade ties in Latin America and elsewhere, positioning itself as a defender of multilateralism.

Still, China came to the table—and in a hurry.

Optics of retreat

But at the risk of sounding repetitive: the U.S.-China structural rift remains.

The tariff truce sidesteps core disputes—intellectual property theft, industrial subsidies, supply chain weaponization, and tech decoupling.

It offers temporary relief, not resolution.

Even post-truce, the U.S. maintains the highest tariffs on any major trading partner—around 40%. China’s stay at 25%.

Biden-era sector-specific tariffs on EVs and semiconductors remain intact. And Trump’s “Liberation Day” baseline tariff of 34% could snap back into place if no deal is reached by August.

Yet markets rose not only in response to the reprieve, but also to the revival of U.S.-China engagement.

A new bilateral mechanism—led by Vice Premier He Lifeng, Treasury Secretary Bessent, and U.S. Trade Representative Jamieson Greer—will guide talks over the next 90 days.

Nevertheless, progress will be modest at best. Trump remains erratic, and Xi now has little reason to curb the Party’s habitual hardline stance.

More telling, unlike past flare-ups, this deal wasn’t announced with Trump’s usual fanfare. No boasting. No bully pulpit. No bombastic, swaggering tweets.

The talks took place at Geneva’s ambassadorial residence—China’s preferred venue—as U.S. officials adopted a more subdued tone, emphasizing “cooperation” and “mutual respect.”

That matters. A lot.

And it speaks volumes about the deeper priorities driving the White House’s so-called “Make America Great Again” agenda.

Peel back the layers, and you’ll find a quieter, more transactional core—where Wall Street discipline, embodied by Bessent, a former hedge fund manager, still holds sway over populist purity.

MAGA may thunder from the podium, but in the backroom, it’s the dealmakers, not the firebrands, who shape the terms.

In the end, the political takeaway stands in plain sight: Xi didn’t just outlast Trump’s tariffs—he changed the fight.

He avoided structural concessions, secured favorable terms, and preserved his leverage.

Meanwhile, Trump’s coercion collapsed under the weight of its own economic blowback.

The Economist called the truce “surprisingly tasty.” The Atlantic was blunter: “Trump suspended his trade war in return for nothing but promises.”

This round of the U.S.-China trade war might look like a draw—but if it was a test of wills, Beijing won hands down.

This Week's China News

The Big Story in China Business

US FINDS ROGUE TECH IN CHINA’S ‘CLEAN ENERGY’ PANELS: U.S. officials have discovered undocumented communication devices—so-called “rogue tech”—embedded in Chinese-made solar power inverters and batteries connected to American power grids.

Power inverters—mostly made in China—are critical components used globally to link solar panels and wind turbines to power grids. They’re also embedded in batteries, heat pumps, and EV chargers.

Although these inverters are designed for remote updates and servicing, utility companies usually set up firewalls to block any direct data transmission back to China.

However, unlike standard features that allow remote software updates, rogue devices may provide hidden communication channels that could bypass installed firewalls, raising the specter of sabotage.