Beijing agreed to pause for one year the sweeping export controls on rare earths announced on Oct. 9 that pushed China and the U.S. toward a trade war.
China successfully used the rare earths export controls
The U.S. cut tariffs on China related to fentanyl to 10% from 20%.
The U.S. will postpone a rule announced on Sept. 29 that blacklisted majority-owned subsidiaries of Chinese companies on an entity list, according to a statement from China’s Ministry of Commerce.
The U.S. and China also agreed to suspend fees for one year on ships that dock at each other’s ports.
China’s dominance of the global supply chain for rare earths gave it significant leverage over the U.S.
More importantly over the past six months both sides have learned about the other’s leverage and vulnerabilities, including which trade weapons work best. For the US it will be disturbing the extent to which China was able to divert US-bound exports to other mainly Asian markets once the US tariffs struck.
Those who predicted China would spill into a crisis will have been sobered by a stock market that has risen by 34% in dollar terms, double the rise for the S&P 500 index.
China’s trade surplus is likely to be larger than last year’s. Meanwhile US inflation figures, driven by tariffs, crept up to a politically perilous 3%. President Donald Trump and President Xi Jinping reached a trade truce during a high-stakes meeting in South Korea on Thursday, de-escalating a dispute over rare earths elements that had threatened to push the world’s two largest economies into a full-blown trade war.
China agreed to pause for one year the sweeping export controls on rare earths announced on Oct. 9 that had touched off the dispute.
Trump told reporters aboard Air Force One that the rare earths agreement is a one-year deal that will be “very routinely extended as time goes by.” The president said he plans to visit China in April and Xi will come to the U.S., either Palm Beach, Florida or Washington, D.C., at a later date
“We have a deal,” Trump said.
“Now, every year we’ll renegotiate the deal, but I think the deal will go on for a long time, long beyond the year. But all of the rare earth has been settled, and that’s for the world.”
"The truce is only for a year, but that may be to China’s advantage. It buys Xi time to push China further ahead in the technologies of the future, including green technology and manufacturing, the field it now dominates, and the centrepiece of the new five-year economic plan," says -- The Guardian's Diplomatic Editor Patrick Wintour.
"One of the difficulties has been that Trump’s strategic objectives in launching the trade war were not articulated ...," he says.
"... the balance between protecting traditional US manufacturing, ring-fencing modern technology-based industries critical to US national security, punishing Chinese trade practices, or more broadly generally overpowering China as a competitive threat, were fudged.
Gradually the battle morphed in some US administration minds from a trade war into a geopolitical trial of strength between the two world’s superpowers, a trial that left the whole world awaiting its outcome."
The U.S. is dependent on China for rare earths, which are used to produce magnets that are key inputs in weapons platforms, semiconductor manufacturing, electric vehicles and other applications.
China successfully used the rare earths export controls and a soybean embargo to force the U.S. to lower tariffs, Wolfe Research strategist Tobin Marcus told clients in a note.
No comments:
Post a Comment