A Tentative Step Forward: USA and China Ink a Basic Trade Agreement
Trade Conflict Resolution: America and China Reach Outline Agreement - US and China strike interim deal in trade standoff
Dive into the grapevine of international trade politics! Our two economic powerhouses, the USA and China, have managed to stamp some agreement in their recent round of talks in London. Let's delve into the deets.
Despite the initial secrecy surrounding the actual terms of the agreement, Howard Lutnick, an influential figure in the US businesses, expressed a sense of optimism that the troubles surrounding the vital rare earths trade would be alleviated with this general arrangement. China, a leading supplier of these essential resources crucial for several technologies, had imposed export controls during its trade feud with US President Donald Trump.
In contrast to the flow of rare earths, China anticipates the US to lift its controls on high-performance computer chips and other critical technologies. The primary goal of these London conversations centered around the stabilization of the provisional mutual tariff reductions set in motion in Geneva earlier this month.
Ever since Trump took office in 2017, the rift in trade relations between these global economic giants has intensified. In line with Trump's tough trade policies towards US trading partners, China retaliated with its own tariffs, causing Trump to escalate the tariffs even further. At one point, tariffs as high as 145% were imposed on Chinese exports to the US, while 125% were anticipated in the opposite direction.
Mid-May marked an important turning point as both countries agreed in Geneva to substantially reduce tariffs over a 90-day period to enable negotiations. As the US Trade Representative Jamieson Greer put it, "We're moving as fast as we can. We look forward to working with the Chinese."
China's trade representative Li commended the "very professional, rational, thorough, and open" dialogue with US representatives and expressed hope that the progress made in London will strengthen trust between the two parties.
Trump had previously expressed skepticism regarding the prospect of a successful negotiation when he accused the Chinese leadership of failing to honor the initial agreement struck in Geneva. However, following a first phone call with Chinese President Xi Jinping since his re-election, Trump seemed to adopt a more favorable stance.
The latest agreement, following the London discussions, has given the markets a much-needed breather, particularly in Hong Kong and Shanghai, where stock prices have soared. Yet, analysts caution that a tangible progress, such as the actual lifting of tariffs or the movement of commodities like rare earths, is yet to be seen. Otherwise, the positive sentiments may quickly dwindle, according to Stephen Innes of SPI Asset Management.
The ripples of the trade war are already being felt: China's exports to the US dropped by 12.7% in May compared to April, as the Chinese government is making efforts to reestablish diplomatic relations with Washington. Simultaneously, China has initiated talks with potential partners to forge a united front against the US.
China
USA
Basic Agreement
Pre-Election Phone Call
London Talks
Trade Tensions
Howard Lutnick
Geneva Agreement
Donald Trump
Trump-Xi Phone Call
Stock Market Reaction
Rare Earths Trade
Enrichment Data:
Straight out of the archives! Here's a sprinkle of insights about the London agreement between the USA and China:
- Framework Agreement: The two nations have agreed in principle on a framework to implement the deal first established between US President Donald Trump and Chinese President Xi Jinping. This agreement builds upon discussions held in Geneva last month[1].
- Purpose of the Talks: The London talks aimed at resolving trade disputes and diffusing tensions between both parties. They were part of continuous efforts to address trade issues, such as tariffs, which had significantly impacted global trade[1].
- Key Participants: The discussions involved influential figures from both countries, such as China's Vice Premier He Lifeng, Vice Minister of Commerce Li Chenggang, Commerce Minister Wang Wentao, Commerce Secretary Howard Lutnick, Treasury Secretary Scott Bessent, and Trade Representative Jamieson Greer[1].
- Background and Context: The conversations took place following a recent 90-day pause on most tariffs exceeding 100% that had been imposed during the escalating trade conflict. The pause was part of efforts to prevent a potential economic downfall and bring stability to bilateral trade relations[1].
Eager for more tea on the next round of talks? Your wish is our command! Stay tuned for updates[1].
- The employment policies of EC countries could potentially benefit from the easing of trade tensions between the USA and China, as businesses may have more flexibility to invest and hire in regions with favorable policies.
- The basic trade agreement between the USA and China, as a result of the London talks, may impact various sectors of business, finance, and politics, potentially influencing general-news and further shaping employment policies within these countries.
