Trump Hails ‘Amazing’ Meeting with China, But No Formal Trade Deal Agreed
In a significant development, former US President Donald Trump and Chinese President Xi Jinping held their first meeting in six years, sparking hopes for a potential de-escalation of tensions between the world’s two largest economies. While no formal trade agreement was reached, both sides expressed optimism and signaled a willingness to address key trade issues that have strained relations in recent years. Trump characterized the talks as “amazing,” while Beijing reported a consensus on resolving “major trade issues.” This article delves into the key outcomes and implications of this high-stakes encounter.
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A ‘Truce’ in the Trade War?
The meeting, held in South Korea, aimed to address the ongoing trade disputes that have seen both countries impose tariffs on each other’s goods. These tensions began when Trump initiated tariffs on Chinese products, triggering retaliatory measures from Beijing. While a temporary truce was established in May, underlying tensions remained. The recent talks, while not resulting in a comprehensive agreement, appear to have laid the groundwork for further negotiations and a potential path toward resolving the trade war.
One significant outcome was China’s agreement to suspend export control measures on rare earths. These materials are critical for manufacturing a wide range of products, from smartphones to advanced military equipment. This concession is seen as a major win for the US. Furthermore, Trump announced that China would immediately begin purchasing “tremendous amounts of soybeans and other farm products.” Retaliatory tariffs by Beijing had severely impacted US farmers, a crucial voting bloc for Trump. Following the meeting, then-US Treasury Secretary Scott Bessent stated that China had committed to buying 12 million metric tonnes of soybeans this season, followed by a minimum of 25 million tonnes per year for the next three years.
Key Outcomes and Lingering Tariffs
In a reciprocal move, the US indicated that it would drop some of the tariffs levied on Beijing concerning the flow of ingredients used in manufacturing fentanyl into the US. Trump had previously imposed tariffs on China, as well as Canada and Mexico, for their perceived failure to curb the flow of this drug. The President of the US-China Business Council welcomed the progress on tariffs and rare earths, calling them the most significant outcomes of the discussions. He described the situation as a “truce,” suggesting a period of stability where further tariff escalations are unlikely in the immediate future. This provides businesses with a window to work with both administrations to address long-standing issues in the trade relationship.
Despite these positive developments, existing tariffs on imported goods from China remain in place. This means that US importers still face tariffs exceeding 40% on certain goods. However, Beijing received a boost with the news that it could now engage with Jensen Huang, the CEO of US tech firm Nvidia. Nvidia plays a central role in the ongoing competition over AI chips, where China seeks access to high-end chips, while the US aims to restrict access due to national security concerns. China has also extended an invitation for Trump to visit in April, signaling a potential thawing of relations. However, there was no mention of any breakthrough regarding TikTok, the video-sharing app. The US has been seeking to separate TikTok’s US operations from its Chinese parent company, ByteDance, citing national security concerns. Beijing stated it would continue working to resolve these issues.
Differing Approaches and Future Outlook
The meeting highlighted the contrasting approaches of the two leaders. Xi Jinping adopted a more measured and prepared demeanor, leveraging China’s position as a major player in global trade. He acknowledged that the two sides would work towards outcomes that would serve as a “reassuring pill” for both economies. Trump, on the other hand, was more ad-lib and appeared noticeably more tense than during other parts of his trip to Southeast Asia, reflecting the high stakes involved in the talks. The usual pomp and ceremony that characterized his visits to other countries were notably absent, underscoring the seriousness of the discussions.
While the meeting did not result in a formal trade deal, the agreements reached on rare earths, soybeans, and fentanyl ingredients suggest a potential pathway towards de-escalating trade tensions between the US and China. The ongoing negotiations and the invitation for Trump to visit China point to a continued effort to improve relations. However, significant challenges remain, including existing tariffs, concerns over AI chips, and the future of TikTok. The coming months will be crucial in determining whether these initial steps can lead to a more stable and mutually beneficial trade relationship between the world’s two largest economies.
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