China Says Success of Trade Talks with The U.S. Makes Tariffs Unnecessary

China’s Commerce Minister, Wang Wentao, has called on the United States to step back from escalating trade tensions and return to a path of mutual cooperation, warning that the two countries must act responsibly to preserve global economic stability.

His remarks come amid a critical countdown to August 12 — the deadline for finalizing a lasting tariff agreement aimed at averting the return of a disruptive trade war.

Wang, speaking to reporters on July 18, said recent negotiations in Geneva and London demonstrated that dialogue was still possible and preferable, emphasizing that the “ups and downs” in U.S.-China relations only highlighted the depth of their economic interdependence.

“Major countries should act like major countries. They must shoulder their responsibilities,” Wang said, while reiterating China’s commitment to protecting its national interests if tensions escalate. “China does not want a trade war, but it is not afraid of one.”

The renewed urgency comes after the U.S. and China reached a preliminary agreement in June to halt weeks of retaliatory tariffs. But with duties on hundreds of billions of dollars’ worth of goods still technically active and the average tariff level imposed by the U.S. on Chinese products standing at 53.6%, the risk of renewed escalation remains significant.

Rare Earths Flowing Again, Hinting at Easing Tensions

There are some signs of thawing. China’s rare earth exports rose by 32% in June compared to May, customs data revealed on July 14. The spike is widely attributed to the tentative agreements reached during the London talks, where both sides reportedly agreed to ease restrictions on the flow of critical minerals, especially rare earths essential to the electronics and defense industries.

In a development tied to those negotiations, Nvidia CEO Jensen Huang confirmed during a recent event in Beijing that the company would resume sales of its H20 AI chips to China. The announcement followed Huang’s meeting with Commerce Minister Wang in Beijing, where both sides discussed ongoing chip cooperation. U.S. Commerce Secretary Howard Lutnick, addressing the matter in Washington, suggested the deal was part of broader concessions linked to the rare earths supply chain agreement.

“This meeting [with Nvidia’s CEO] shows that as the dust settles, everyone – especially the U.S. side – realizes that forced decoupling is impossible,” Wang said. He added that both countries are beginning to understand the consequences of severing ties in key industries like semiconductors, which underpin future technological competition.

Tariff Impact Could Undermine Manufacturers on Both Sides

Analysts warn that if no resolution is reached by August 12, both sides could reimpose duties exceeding 100% on certain goods, which would severely disrupt global supply chains. Chinese manufacturers are already operating under thin profit margins, and additional tariffs above 35% could push many out of U.S. markets entirely.

“Both sides have come to understand that they need each other, as lots of the goods and services that we exchange are irreplaceable, or at least difficult to exchange in the short term,” Wang noted.

Despite the hostility that has characterized trade relations in recent years, particularly under previous U.S. administrations, Beijing appears keen to reset the tone. Wang emphasized the importance of dialogue and high-level engagement, asserting that agreements reached through negotiation offer a realistic path to “healthy, stable, and sustainable development” in the U.S.-China trade relationship.

As the clock ticks toward the August deadline, the outcome of talks will determine whether the two largest economies continue walking back from the brink or descend once again into a full-blown trade conflict that could ripple across global markets.