The Illusion of Quick Fixes: Why China and the US Won't Resolve Trade Tensions Anytime Soon

The world is holding its breath waiting for the US and China to ink a trade deal, but according to Charlene Barshefsky—the architect of China’s WTO accession two decades ago—don’t expect miracles. At the Bund Summit in Shanghai, the former U.S. Trade Representative delivered a sobering reality check: any agreement between Washington and Beijing will merely “set a tactical floor for the moment,” doing nothing to alter the fundamental economic trajectories of either power.

The question looming over global markets isn’t whether China is going to overtake the US as the world’s economic leader—it’s whether either side even wants to resolve the deeper structural conflicts that have them at loggerheads. According to Barshefsky, the answer is no. She believes the two economies operate under such different strategic visions that no handshake deal can bridge the gap.

The World Is Already Splintering Into Three Economic Camps

Rather than a unified global trading system, Barshefsky envisions the world reorganizing into three distinct economic blocs. The first cluster centers on the US and its traditional allies. The second includes China alongside nations in the Global South, Russia, and possibly Middle Eastern powers. A third group—India and other non-aligned economies—will operate as wildcards in this multipolar economic landscape.

This fragmentation, she warns, cannot be reversed by diplomatic negotiations alone. It represents a systemic shift, not a temporary standoff. The real question facing investors and policymakers: is China going to overtake the US through this economic realignment, or will both superpowers emerge from a divided system stronger but more isolated?

Talks Resume, But Trust Keeps Deteriorating

Fresh negotiations kicked off Saturday in Kuala Lumpur with senior economic officials from both nations back at the table. The U.S. Treasury characterized the discussions as “very constructive”—standard diplomatic language that masks deeper apprehension on both sides.

The underlying fear is palpable: neither power wants to repeat the catastrophic tariff spiral that once pushed levies above 100% on certain goods. A scheduled meeting between President Trump and President Xi Jinping next week has accelerated the pace of talks, but the atmosphere remains tense and fragile.

The Truce Is Running Out of Time

Back in May, Treasury Secretary Bessent and National Economic Council Director Greer sat down with Chinese officials in Geneva to hammer out a temporary 90-day truce. The agreement knocked tariffs down to roughly 55% on U.S. goods heading to China and 30% on Chinese exports flowing back to America. The pause even allowed magnet trade to resume.

Extensions in London and Stockholm bought more time, but the November 10 deadline looms. That’s when the temporary reprieve expires, and both sides revert to hostile posturing—unless a new agreement materializes.

September’s Blacklist Gambit Changed Everything

The U.S. moved first with aggressive action at the end of September. The Commerce Department unleashed a sweeping export blacklist targeting Chinese companies, including any firm with more than 50% ownership by blacklisted entities. This one move instantly severed U.S. exports to thousands of Chinese businesses, escalating tensions dramatically.

Rare Earth Becomes the New Flashpoint

China didn’t sit idle. On October 10, Beijing tightened its rare earth export controls, explicitly aimed at restricting access to materials used in foreign military applications. U.S. negotiators Bessent and Greer fired back, condemning the move as a “global supply chain power grab” and vowing that America and its allies would retaliate in kind.

Now the Trump administration is reportedly preparing its own counterstrike: restrictions on a sprawling array of software-dependent U.S. exports to China, from laptops and smartphones to jet engines. Simultaneously, Washington launched a fresh tariff investigation into China’s failure to uphold commitments under the 2020 “Phase One” trade agreement—the deal that temporarily halted the original trade war during Trump’s first term.

Conflicting Visions Emerge at Shanghai Summit

The philosophical divide surfaced starkly at the Bund Summit, where speakers openly criticized both superpowers. Some criticized China’s export-heavy economic model, arguing it inflates China’s trade surplus at the expense of trading partners.

Yu Yongding, a former advisor to China’s central bank, pushed back forcefully. He argued that the U.S. should take ownership of its failure to distribute globalization’s benefits broadly across its own population, rather than scapegoating China. Yu also contended that Beijing has been gradually rebalancing toward domestic consumption, and he defended the rare earth restrictions as a legitimate response to American sanctions.

When pressed about potential collateral damage to Europe from the rare earth curbs, Yu suggested the restrictions weren’t targeting European economies and hinted that technical adjustments could minimize spillover effects.

The Bottom Line: Expect Tactical Pauses, Not Strategic Resolution

The emerging pattern is clear: both the US and China are going to continue maneuvering within the constraints of geopolitical competition. Short-term truces and tactical agreements will punctuate the relationship, but they won’t resolve the underlying question of whether China is going to overtake the US economically, or whether the two powers will carve out a stable coexistence in a bifurcated world.

Barshefsky’s warning encapsulates the new reality: don’t mistake a temporary ceasefire for a durable peace. The structural competition between these two economic systems is here to stay.