US, China Trade Talks Yield Suggestion of Deal on Chip Exports

Strategic Insights -

US President Donald Trump's administration is prepared to ease restrictions on selling chips to China if Beijing accelerates the export of rare earths, according to Kevin Hassett, director of the White House National Economic Council. In a significant departure from the Biden administration's stance, Hassett suggested that Trump is willing to put export controls on the negotiating table. The US and Chinese delegations, led by Scott Bessent and He Lifeng, respectively, began trade talks in London yesterday, with a deal on rare earths emerging as a key sticking point.

Key Takeaways:

  • The US is willing to ease restrictions on selling chips to China if Beijing accelerates the export of rare earths.
  • Kevin Hassett, White House National Economic Council director, expects a deal to be reached, resulting in China speeding up the export of rare earths.
  • The two countries agreed to cut tariffs on each other for 90 days in Geneva following concerns about their impact on bilateral trade and global supply chains.
  • China's exports to the US plummeted last month by the most since the start of the Covid-19 pandemic in 2020.
  • Trump administration's willingness to ease export controls marks a significant departure from the administration of Joe Biden.
  • Nvidia, a US chipmaker, may not be exempt from US export controls, despite Hassett's suggestion.

Statistics:

  • 90 days: Duration of the trade deal agreed upon in Geneva.
  • 2020: Year the Covid-19 pandemic started, marking the last time Chinese exports to the US plunged by this much.
  • 1st time: China has used rare earths to put pressure on US companies in a serious way.
  • 90%: Reduction in tariffs agreed upon in Geneva.

Sources:

  • "US prepares to ease chip export curbs as part of trade deal with Xi Jinping" by Demetri Sevastopulo in the Financial Times yesterday.
  • "China's rare earths export controls stoke tensions with the US" by Ian Bottley in the Financial Times last month.
  • "US and China trade deal: Everything you need to know" by Financial Times.