The Great Wall of Tariffs Just Got a Door

June 16th, 2025

Ian Cheng

Trade between the United States and China has reached a major breakthrough: a deal. But there’s more. Secretary of Commerce Howard Lutnick described it as “a handshake for a framework,” not a full-on finalized agreement. Respective leaders Donald Trump and Xi Jinping have the final say on the deal, where concessions will be decided. It builds upon the more informal agreements made in Geneva, Switzerland. The most important takeaway is that hostile measures taken in the past are apparently neutralized.

According to a Truth Social post by the president, US tariffs, or taxes on imported foreign goods, on China would be a total of 55%. In contrast, China allegedly will place a 10% tariff on US products. Specific rates are unclear, but some will likely be lower. For example, 25% of the mind blowing 145% tariff that President Trump placed on China this April was only for steel, aluminum, cars, and car parts. These are products that the United States wants to build an independent industry in and thus, tariffs will be kept high to reduce Chinese competition, because a higher tax means it's more expensive to import.

On the other hand, for goods where China is more reliant on the US, such as oil, the tariff would probably be lower. Any sort of agreement likely would not have been reached if the United States already had a massive domestic supply of some products, yet made certain Chinese goods more expensive to US consumers. However, more details about the deal is necessary to evaluate its complete impact.

China has agreed to start approving rare-earth license applications from US companies, but has inserted a six-month limit on rare-earth export licenses. This is nicer than tough restrictions, but it is a way for the Asian superpower to continue their chokehold over these key goods, important for modern processes like smartphone and EV battery production and even petroleum mining. Most importantly, it illustrates how China is trying to keep leverage that they can use if another conflict emerges. In this flashpoint, the US’s tool is the sale of manufactured goods, especially jet engines, that China is desperate for. This is an area that the two nations could fight over again.

An aspect of the framework relevant to geopolitics is the much-talked about July 8th deadline, the day that nations hit by Liberation Day tariffs must negotiate a trade deal with the United States. Trump has said that he’s willing to extend the deadline, but also expressed that the deadline is unnecessary because the US will provide “take it or leave it” offers, likely to pressure nations into giving concessions. This also applies to the US-China deal and only time will tell how it affects the final negotiations between Trump and Xi.

One issue that might affect the deal significantly is the legal battle over the tariffs. According to the Constitution, Congress has all of the power to impose tariffs on other countries. This means that Trump’s unilateral placement of tariffs could be unconstitutional. Furthermore, the reasoning used for the extra levies, the International Emergency Powers Act (IIEPA,) doesn’t contain the word “tariff” or any synonym of it. The act is only activated when there’s an “extraordinary threat”, which Trump said was fentanyl and illegal immigration.

However, the entire picture is trickier. The IIEPA gives the president authority to restrict imports, which are part of what tariffs do. In May, an appeals court granted a Trump administration request to postpone the Court of International Trade judgement that the tariffs were illegal. There’s a possibility that the Supreme Court or other federal courts rule that Trump did have the authority to impose tariffs because the “extraordinary” threat is valid. If the tariffs are deemed illegal, the trade deal would have to be completely changed up, and could thus fall apart. Tariff legality has not yet been taken into consideration during bilateral negotiations.

Despite everything, one thing’s for certain, the US-China relationship as a whole is about to experience a seismic shift, whether it be positive with a mutually beneficial deal, or negative with a complete fallout. This developing story will only get more complicated and is truly one to watch.