The US and China reach trade truce, but tensions remain
Image: Evelyn Hockstein
President Trump and Chinese President Xi Jinping reached a trade truce during a high-stakes summit in South Korea early yesterday morning, in a deal that de-escalates recent tensions between the world’s two largest economies.
What’s in the agreement?
Trump and Xi emerged from their first face-to-face meeting in six years with an agreement to reduce steep US tariffs on Chinese goods, in exchange for a pledge by Beijing to halt export controls on rare earth elements.
Trump pledged to cut fentanyl-related tariffs on China in half (from 20% to 10%), in a move that drops the average tariff rate on many Chinese products to around 47%.
On the flip side, Beijing agreed to pause its sweeping export controls on rare earths—for which China controls the global market—for one year, in a deal Trump said will be “very routinely extended as time goes by.”
- China’s move to impose such export controls had initially touched off the trade dispute between the two countries earlier this month.
- Rare earth elements are vital to the manufacturing of cars, planes, batteries, bombs, and many other critical products.
The deal also includes several other clauses, though the specifics are currently unclear.
According to Trump, China agreed to take “very strong action” on chemicals used to produce fentanyl domestically, and could soon agree to buy a large amount of oil and gas from Alaska.
Treasury Secretary Scott Bessent also said Beijing agreed to buy 25 million metric tons of soybeans from the US annually over the next three years, though Chinese officials simply said the two sides agreed to expand agricultural trade without providing specifics.
In other US-China news
Just one hour ahead of his meeting with Chinese leadership, President Trump announced the US will resume testing nuclear weapons for the first time in 30+ years. He said the move is “because of other countries testing programs”—citing Russia and China—and that America will start testing nukes “on an equal basis.”
- The announcement comes as China has roughly doubled its nuclear arsenal in the past five years (to ~600 warheads), and is expected to do so again by 2030.
- Russia currently has slightly more nuclear warheads than the US, at ~5,500 compared to America’s ~5,200, per independent estimates.
- However, there have been no public reports of Russia or China conducting tests with live nuclear weapons since the 1990s, similar to the US.
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Sprinkles from the Left
- Some commentators argue that Trump’s meeting with Xi was a welcome trade de-escalation, but what came out of this meeting looks more like a temporary truce than a lasting peace pact.
- Others contend that recent events show Trump’s usual trade approach—shout loudly and wave a big stick—faltered when Beijing raised its own bludgeon, and now Trump is predictably trying to frame a less-than-stellar deal as a total win.
- “Trump-Xi summit yields trade war truce that buys U.S. time” –WaPo Editorial Board
- “Trump and China: stepping back from the brink, but not solving problems” –The Guardian Editorial Board
- “Trump Lost the Trade War to China” –Nicholas Kristof, NY Times
Sprinkles from the Right
- Some commentators argue that the best thing to say about the new US-China trade deal is that it averted more economic damage, and two lessons to take away are: 1) trade wars aren’t easy to win, and 2) fighting a trade war without allies is a mistake.
- Others contend that the trade deal may create a truce for now, but China’s concessions are minor and reversible—and the current atmosphere of goodwill is likely to dissolve as soon as one side shifts from cooperation back to competition.
- “Lessons From Trump’s China Trade War” –WSJ Editorial Board
- “Trump and Xi call truce for now, but this ‘12 out of 10’ meeting leaves a lot unanswered” –Jack Burnham, NY Post
- “How Good Is Trump's Trade Deal With China?” –Paul Gigot, Allysia Finley, and Joe Sternberg, Potomac Watch
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