Trade Tensions Ease as US Considers Longer Tariff "Truces" with China

Strategic Insights -

Tensions between the US and China may ease as US Treasury Secretary Scott Bessent hints at the possibility of longer pauses for import duties on Chinese goods, if Beijing halts its planned controls on critical minerals. Meanwhile, the UK has targeted Russia's energy sector in its latest sanctions package, and the EU has backed Spain against US threats of additional tariffs over Spanish military spending.

Key Takeaways:

  • US Treasury Secretary Scott Bessent hints at possibility of longer pauses for import duties on Chinese goods if Beijing halts critical minerals controls.
  • Since June, peace within the trade war between the US and China has relied on rolling 90-day truces.
  • China announced it would not allow the export of rare earth minerals for use by foreign militaries and imposed other export restrictions on the flow of technology and skills involved in minerals production.
  • UK trade deficit widened in the three months to August, expanding by £1.7bn to £5.2bn, as exports fell by more than imports.
  • Exports to the US continued to fall, with a £0.7bn drop last month, while the UK imported £0.5bn less American goods in August.
  • The UK economy returned to growth last month, as GDP increased by 0.1%, however the ONS also revised down last month's figures to a 0.1% decline.
  • EU would respond "appropriately" if the US imposed tariffs against a member state, after President Donald Trump threatened to hit Spain with additional measures if Madrid didn't meet its NATO commitment to 5% military spending.
  • Spanish prime minister Pedro Sanchez has previously vowed to raise military spending, with ministers in his government stating that Spain has been a "responsible NATO ally of forty years".
  • UK has revealed more sanctions against Russia, this time targeting the Russian energy sector, with 90 new sanctions measures primarily targeted at Russian energy exports.
  • Foreign Secretary Yvette Cooper said: "At this critical moment for Ukraine, Europe is stepping up. Together, the UK and our allies are piling the pressure on Putin - going after his oil, gas and shadow fleet - and we will not relent until he abandons his failed war of conquest and gets serious about peace."

Statistics:

  • UK trade deficit widened in the three months to August, expanding by £1.7bn to £5.2bn (OFCOM).
  • Exports to the US continued to fall, with a £0.7bn drop last month, while the UK imported £0.5bn less American goods in August (OFCOM).
  • UK economy returned to growth last month, as GDP increased by 0.1% (ONS).
  • 90 new sanctions measures primarily targeted at Russian energy exports (Foreign Office).
  • Russian oil companies Rosneft and Lukoil are some of the primary targets of the new measures (Foreign Office).
  • 44 ships in the so-called Russian 'shadow fleet' targeted by new sanctions measures (Foreign Office).

Sources:

  • Bloomberg
  • Office for National Statistics (ONS)
  • Office for Communications (OFCOM)
  • Spanish news agency EFE
  • Foreign Office
  • International Monetary Fund