The US plans to impose a 55% tariff on Chinese imports, while China will respond with a 10% tariff on US goods, a sharp rise from the 25% rate in place when Trump returned to office in January.
China insists it is a trustworthy partner in US trade pact
Source Cryptopolitan
China has strongly reiterated its dedication to the recently brokered trade agreement with the United States, underscoring that it “always keeps its word,”.
This follows a pivotal phone conversation between President Xi Jinping and Donald Trump. The terms of the trade agreement stated that both countries should stick to the agreement. Following the terms, China emphasized that it always honors its commitments. This represents a fragile truce in a trade war between the world’s two largest economies.
The US and China close new ‘groundbreaking deal’
On Wednesday, June 10, Trump expressed his satisfaction with the trade deal. He stated on Truth Social, “Our deal with China is completed, pending final approval from President Xi and me.”
The deal is that China will supply the US with full magnets and any needed rare earth materials upfront. In return, the US will provide what they agreed upon, including allowing Chinese students to attend their colleges and universities, which Trump claimed he has always supported. Trump also revealed they are implementing 55% tariffs, while China is getting 10%.
Following the trade agreement, during a regular news briefing, Lin Jian, the deputy director of the information department of the Ministry of Foreign Affairs of China, highlighted that the nation has consistently honored its commitments and produced positive outcomes. Therefore, according to him, now that an agreement has been made, both parties should stick to it.
The phone call between Trump and Xi ended a standoff that had emerged only weeks after they reached an initial agreement in Geneva. Another round of discussions in London quickly followed, and Washington said the talks had added “meat on the bones” to the Geneva agreement to reduce bilateral retaliatory tariffs.
The Geneva agreement stumbled because China reportedly continued to limit its mineral exports. In response, the Trump administration imposed export controls that stopped shipments of semiconductor design software, jet engines for Chinese aircraft, and other products to China.
However, the details of this new agreement and how it will be implemented remain unclear.
Trade truce raises new risks and leaves core issues unresolved
The tentative agreement between the United States and China might suggest a step back from the worst-case scenario of a complete trade breakdown between the two largest economies in the world. However, it seems to create more issues than it resolves.
What has been shared by people with knowledge of the agreement indicates that this deal may harm both economies and not address critical problems, such as China’s control over the rare earth supply chain.
Regarding the trade agreement, Trump cited rare earths specifically, noting that China will supply these metals, which are essential for many electronics and vehicles, “up front.” However, the agreement does not really tackle the primary issues faced by rare earth and other processed metals, such as lithium and cobalt, which Chinese companies dominate.
Such high tariffs could reduce trade, raise inflation in the United States, and slow economic growth in both nations.
If Beijing, instead, decided to keep the 10% tariff on US energy imports in place, it would probably block almost all US crude oil, coal, and liquefied natural gas from heading into China. This would remove one of the few items the nation can purchase in significant quantities from the US.
It is also unclear whether these taxes will result in more manufacturing in the US or push some production from China to countries with lower import taxes.
Therefore, it is worth noting that even at its best, this week’s deal is a temporary fix. It averted an immediate crisis for US manufacturing. Still, it left the door open for Beijing to dangle a threat of supply cutoff at the United States if there were other problems between the countries down the road.
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