United States and China sign trade agreement
Piece by Piece:
After a series of talks in Geneva and London, the United States and China have thumbed a deal on trade issues, and signed it on June 25th, 2020. This agreement awaits approval from the respective presidents, Donald Trump and Xi Jinping.
In an interview with Bloomberg, the U.S. Trade Representative, Robert Lighthizer, disclosed the deal's details and hinted at the imminent completion of similar agreements with a dozen more countries. He stated that the real win for the U.S. is China's commitment to resume exports of critical rare-earth minerals needed for almost every sector of industry.
"We need them to ship us rare-earths. As soon as those shipments resume, we'll scrap our countermeasures," Lighthizer revealed.
Lighthizer also exposed that bilateral trade agreements with a dozen countries will be sealed within the next fortnight. Let's not forget, U.S. tariffs on those very countries' goods will be imposed by July 9th, if no agreements have been signed by then. Given that President Trump has imposed tariffs on goods from 180+ countries and will likely sign only a handful of agreements by July 9th, it's obvious that Trump will likely postpone the tariff imposition again.
As for which countries the U.S. is in the final stages of negotiation with, Lighthizer remained tight-lipped. However, Trump has confirmed that he's edging towards the conclusion of talks with India. He has reportedly issued letters to other countries, outlining the consequences if agreements aren't signed in time.
President Trump announced the imposition of retaliatory tariffs reaching up to 50% for some countries on April 2nd, but delayed their implementation for 90 days, till July 9th, to give the affected countries time to sign new trade agreements on more advantageous (for the U.S.) terms.
Trade agreements, much like everything Trump-related, are shrouded in mystery. For instance, it's unclear how fully these agreements will materialize, as trade negotiations between Washington and Beijing are incredibly complex and often drag on for years. With three months remaining for the completion of a comprehensive agreement, that's certainly not enough. Notably, the first trade agreement between the U.S. and Britain left key questions unanswered.
Naturally, the U.S.-China agreement can't be comprehensive. Hence, Lighthizer isn't shy about admitting that. The U.S.-China agreement, for example, makes no mention of fentanyl imports, one of the reasons speculated to have prompted Trump's trade war with China[1][2][3]. Moreover, hotly debated issues such as American exporters' access to the Chinese market are also absent from the signed deal.
The talks in Geneva were rough: initially, both sides agreed to cut tariffs, signaling significant progress, but soon returned to confrontation, accusing each other of violating agreed-upon terms. Negotiations shifted to London, where they continued and resulted in the agreement. However, it's premature to proclaim an end to the trade war between the two largest economies of the planet as issues and disagreements in trade between Washington and Beijing persist[1][2][3].
Insights:
- The recent U.S.-China trade agreement focuses on reviving the supply of critical rare-earth minerals essential for high-tech industries. These minerals are vital for manufacturing electronic goods like electric vehicles, defense equipment, hard drives, robotics, and wind turbines. Under the deal, China has agreed to expedite the evaluation and approval of export licenses for controlled rare-earth minerals. In return, the U.S. has agreed to lift several restrictive measures it had imposed on China.
- The U.S. is also engaged in trade negotiations with a dozen more countries, including India, with the aim of forging numerous new trade agreements.
- These developments are crucial in easing trade tensions and safeguarding critical supply chains for the U.S. high-tech industry.
- The U.S.-China trade agreement, while not comprehensive, does include a commitment from China to resume the export of critical rare-earth minerals essential for various business sectors, including high-tech industries, a move that could significantly impact finance through the advancement of technology and industry.
- In addition to the agreement with China, the U.S. is also negotiating with a dozen other countries to forge new trade deals, with India being one of them, these developments are crucial in business and politics, as they have the potential to reshape general-news narratives related to international trade, by easing tensions and securing critical supply chains for the U.S. high-tech industry.
