one will give in on tariffs, the other on rare earths

Donald Trump and Xi Jinping They have met in BusanSouth Korea, in their first face-to-face meeting in six years. The goal: to see if there was any way to deal with all the chaos of their trade war, one that has shaken global markets and threatened to destabilize the world economy. After shaking hands at Gimhae air base, Trump stated that it was going to be a successful meeting, although he also warned that Xi is “a difficult negotiator.”

What has been agreed. After approximately ninety minutes of talks, Trump assured that there would be significant tariff reductions. On the one hand, the president claims that tariffs related to fentanyl will drop from 20% to 10%which would place the total tariff burden on Chinese products at around 47%, compared to the previous 57%.

Just like the media points outChina, for its part, has agreed to postpone for a year new restrictions on the export of rare earths processed, critical minerals for sectors such as defense, technology and renewable energies. In addition, Beijing will resume the massive purchase of American soybeans, a relief for North American farmers, tremendously affected by the absence of China in their market this year.

Why is it important. This meeting comes after months of commercial escalation which has made investors and allies alike nervous. Logically, the fact that the two largest economies on the planet confront each other has consequences at a global level. Chinese restrictions on rare earths and lithium batteries threatened to cripple essential supply chains, while US tariffs on technology have curbed China’s ambitions in artificial intelligence. Furthermore, the agreement reached in Kuala Lumpur prior consultations sets the stage for a truce that, if fulfilled, could inject stability into a highly volatile global economy.

We have to wait for results. Despite the optimistic tone, there is room for caution. Trump and Xi have already signed a “phase one” agreement in 2020 that forced China to buy more American agricultural products, something that Beijing barely complied with, according to words from WSJ.

This time there are more elements at stake: the suspension of US investigations into Chinese maritime and logistics industries, review of technological export controls, advances in the case of TikTokrare earths, Taiwan and more. According to the Chinese Ministry of Commerce, both sides “have reached consensus while respecting principles of equality and mutual benefit.” It remains to be seen if that consensus ends up materializing.

What was not touched. Trump claimed that Taiwan was not discussed at the meeting, allaying fears in Taipei about possible American concessions in exchange for trade advantages. Just like they explain From WSJ, the Secretary of State, Marco Rubio, had already publicly ruled out this possibility days before.

Regarding Ukraine, Trump said they discussed the issue “extensively” and that both countries will work together to find a solution, although he did not give details. Curiously, according to point The Guardian, minutes before the meeting, Trump ordered the Pentagon to resume nuclear weapons testing, although the president later suggested it was not related to China.

And now what. Xi has declared that both sides should “finish follow-up work as soon as possible” to implement the consensus reached. trump confirmed that he will visit China in April and that Xi will travel to the United States later. It remains to be seen if what Trump has loudly announced ends up materializing or if, on the contrary, it remains another meeting of unfulfilled promises.

Cover image | Guardian

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