US Trade Negotiations Yield Unexpected Truce Amid Discovery That China Can Be Bullied Back
The surprise truce between US President Donald Trump and Chinese President Xi Jinping has raised hopes that a long-standing trade war may be coming to an end. However, beneath the surface of this agreement lies a more complex picture.
Trump's decision to launch a trade war against China six months ago was marked by a lack of clear strategic objectives, which gradually morphed into a geopolitical trial of strength between the two superpowers. The US tariffs on Chinese goods have averaged 55%, posing a significant stress test to the resilience of the Chinese economy. Despite this, China has managed to absorb the shock and even benefit from the situation, with its stock market rising by 34% in dollar terms.
The US administration's failure to shed its supply chain reliance on China's near monopoly on refining rare-earth products has been exposed as a weakness. China's export controls on these essential elements for hi-tech manufacturing have given Beijing significant leverage. The US has tried to retaliate with measures such as expanding sanctions against Chinese companies, but Beijing has responded by tightening its own export controls.
The terms of the agreement reached between Trump and Xi in Busan, South Korea, appear more like a truce than a durable peace. China has agreed to defer certain restrictions on the export of rare-earth materials, while the US has halved its 20% tariffs on Chinese goods. However, these concessions come with significant caveats, including the need for reciprocal visits from each leader within a year and the continuation of a fragile status quo.
The US has also learned about China's leverage and vulnerabilities during this crisis, including which trade weapons work best. The extent to which China was able to divert US-bound exports to other Asian markets once the US tariffs struck is a worrying sign for the resilience of the US economy.
Trump's meeting with Xi marked a turning point in the negotiations, as both sides have gained a deeper understanding of each other's strengths and weaknesses. The truce will only last for a year, but this period may give China significant time to push itself further ahead in emerging technologies such as green technology and manufacturing.
Ultimately, the agreement has exposed a fundamental difference in leadership styles between Trump and Xi Jinping. Trump's approach is characterized by intuition and instinct, while Xi Jinping is an exponent of the war of position, where consistency and strategy are paramount. For now, it appears that Xi Jinping is winning, but this dynamic may shift as time goes on.
The truce also raises questions about China's role in the global economy and its willingness to engage with other nations. The agreement has been hailed by some as a victory for China, which is seen as emerging from the crisis with its reputation intact. However, others have expressed concerns that this deal may embolden China's authoritarian leaders and undermine US influence in the region.
In conclusion, while the truce between Trump and Xi Jinping has provided a temporary respite from the trade war, it also highlights deeper structural issues in the relationship between the two nations. The agreement marks an unexpected shift in power dynamics, with China emerging as a more resilient and strategic partner than anticipated. As the world watches this dynamic unfold, one thing is clear: America discovered that bullies can be bullied back.
The surprise truce between US President Donald Trump and Chinese President Xi Jinping has raised hopes that a long-standing trade war may be coming to an end. However, beneath the surface of this agreement lies a more complex picture.
Trump's decision to launch a trade war against China six months ago was marked by a lack of clear strategic objectives, which gradually morphed into a geopolitical trial of strength between the two superpowers. The US tariffs on Chinese goods have averaged 55%, posing a significant stress test to the resilience of the Chinese economy. Despite this, China has managed to absorb the shock and even benefit from the situation, with its stock market rising by 34% in dollar terms.
The US administration's failure to shed its supply chain reliance on China's near monopoly on refining rare-earth products has been exposed as a weakness. China's export controls on these essential elements for hi-tech manufacturing have given Beijing significant leverage. The US has tried to retaliate with measures such as expanding sanctions against Chinese companies, but Beijing has responded by tightening its own export controls.
The terms of the agreement reached between Trump and Xi in Busan, South Korea, appear more like a truce than a durable peace. China has agreed to defer certain restrictions on the export of rare-earth materials, while the US has halved its 20% tariffs on Chinese goods. However, these concessions come with significant caveats, including the need for reciprocal visits from each leader within a year and the continuation of a fragile status quo.
The US has also learned about China's leverage and vulnerabilities during this crisis, including which trade weapons work best. The extent to which China was able to divert US-bound exports to other Asian markets once the US tariffs struck is a worrying sign for the resilience of the US economy.
Trump's meeting with Xi marked a turning point in the negotiations, as both sides have gained a deeper understanding of each other's strengths and weaknesses. The truce will only last for a year, but this period may give China significant time to push itself further ahead in emerging technologies such as green technology and manufacturing.
Ultimately, the agreement has exposed a fundamental difference in leadership styles between Trump and Xi Jinping. Trump's approach is characterized by intuition and instinct, while Xi Jinping is an exponent of the war of position, where consistency and strategy are paramount. For now, it appears that Xi Jinping is winning, but this dynamic may shift as time goes on.
The truce also raises questions about China's role in the global economy and its willingness to engage with other nations. The agreement has been hailed by some as a victory for China, which is seen as emerging from the crisis with its reputation intact. However, others have expressed concerns that this deal may embolden China's authoritarian leaders and undermine US influence in the region.
In conclusion, while the truce between Trump and Xi Jinping has provided a temporary respite from the trade war, it also highlights deeper structural issues in the relationship between the two nations. The agreement marks an unexpected shift in power dynamics, with China emerging as a more resilient and strategic partner than anticipated. As the world watches this dynamic unfold, one thing is clear: America discovered that bullies can be bullied back.