US-China Trade Tensions Ease as Trump Administration Claims Breakthrough Deal

Strategic Insights -

The Trump administration is boasting about a potential breakthrough trade deal with China, which could restore the relationship between the two nations to its status quo before President Trump initiated a trade war with Beijing. The deal, which has not been finalized, includes China agreeing to delay its new licensing system on rare earth minerals, purchase American soybeans, and help the US stop the flow of chemical ingredients used to make illicit fentanyl. American and Chinese negotiators have reportedly reached a substantial framework for the two leaders to discuss when they meet in South Korea on Thursday.

Key Takeaways:

  • The Trump administration claims that China has agreed to delay its new licensing system on rare earth minerals for a year while it re-examines it, averting a 100% increase in US tariffs on Chinese exports scheduled for November 1.
  • China has also agreed to make "substantial agriculture purchases" for US farmers, including purchases of American soybeans, which has been touted as "big news" by Agriculture Secretary Brooke Rollins.
  • The US has reportedly paused or removed some of its tariffs in exchange for China's concessions, although the terms of the deal have not been fully disclosed.
  • Critics argue that the Trump administration is claiming credit for solving a crisis of its own making, as China stopped its soybean purchases earlier this year in response to US tariffs.
  • The deal does not address longstanding American concerns about China's trade practices, which ostensibly sparked the trade clash.
  • The US and China have shown a willingness to repeatedly escalate trade tensions and hurt companies that do business across the Pacific.
  • The deal-making process has been marked by unpredictability, with negotiations dominated by China's curbs on rare earths and other issues.
  • The meeting between Trump and Xi Jinping could result in additional deals, including potential agreements on "more balanced trade," geopolitical relations in the Middle East and Asia, and Ukraine.

Statistics:

  • A 100% increase in US tariffs on Chinese exports was averted, with China agreeing to delay its new licensing system on rare earth minerals.
  • China has agreed to make "substantial agriculture purchases" for US farmers, including purchases of American soybeans.
  • The US has reportedly put a 20% tariff on all Chinese exports in return for China's role in channeling fentanyl to the US.
  • The Trump administration has imposed fees on Chinese ships that dock in American harbors, expanded its technology controls, and threatened an additional 100% tariff on Chinese goods as of November 1.

Sources:

  • Ana Swanson, "US and China Agree on Potential Breakthrough in Trade Talks, Officials Say", New York Times, 2022 (no exact date mentioned)
  • Scott Bessent, Treasury Secretary, ABC News, 2022 (no exact date mentioned)
  • Brooke Rollins, Agriculture Secretary, social media, 2022 (no exact date mentioned)
  • Paul Triolo, partner at DGA-Albright Stonebridge Group, quoted in Ana Swanson, "US and China Agree on Potential Breakthrough in Trade Talks, Officials Say", New York Times, 2022 (no exact date mentioned)
  • Jonathan A. Czin, fellow at Brookings Institution, quoted in Ana Swanson, "US and China Agree on Potential Breakthrough in Trade Talks, Officials Say", New York Times, 2022 (no exact date mentioned)
  • Evan Medeiros, professor at Georgetown University and senior adviser at the Asia Group, quoted in Ana Swanson, "US and China Agree on Potential Breakthrough in Trade Talks, Officials Say", New York Times, 2022 (no exact date mentioned)