A New Step Forward: USA and China Agree on Trade Framework
U.S. and China Agree on Main Terms for Trade Resolution - U.S. and China negotiate tentative accord, easing trade disagreements.
The nitty-gritty details of the latest agreement weren't immediately shared by reps from Beijing and Washington. Optimism spiked, though, as Howard Lutnick, a key player, reckoned issues surrounding rare earths could find resolution via this new framework. China, a significant player in the trade of these valuable materials essential for a host of tech products, had previously instated export controls during their trade quarrel with then-US President Donald Trump.
On the flip side, China aims to see the US lift export controls on high-performance computer chips and related tech. The main goal of the negotiations in the British capital was to solidify the temporary tariff reductions agreed upon in Geneva last month—a step towards normalizing trade relations.
Since Trump took office in January, the trade conflict between the world's two largest economies escalated. China retaliated to Trump's tough trade tactics towards US partners with its own tariffs, prompting Trump to escalate matters further. Consequently, a tariff of 145% was imposed on Chinese exports to the US, whereas 125% was applied in the opposite direction.
In mid-May, both countries agreed to substantially reduce tariffs for 90 days to foster negotiation progress. US trade representative Jamieson Greer, who took part in the London talks, shared that "we're moving as fast as we can," hoping to collaborate effectively with the Chinese.
Li, China's trade representative, appreciated the "professional, rational, thorough, and open" exchange with US reps. He hoped advancements made in London would bolster trust on both sides.
Trump initially expressed skepticism about the possibility of success with negotiations, doubting the adherence of Beijing's leadership to the first Geneva agreement. Yet, following a phone call with Chinese President Xi Jinping last week, Trump seemed more optimistic.
Stock prices soared, particularly in Hong Kong and Shanghai, as a result of the agreement's appearance. However, analysts pointed out that no concrete details regarding the agreed points had been provided thus far. Neither Washington nor Beijing has made any updates to the Geneva agreement as of yet.
Should progress stall soon, say, with no tangible actions like export of rare earths or lifting of tariffs, the mood could swiftly change again according to Stephen Innes of SPI Asset Management. For now, stock prices mainly ride on warm words.
China's exports to the US dropped by 12.7% in May as compared to April, according to official statistics from Beijing. The Chinese government is actively working towards normalizing relations with Washington, while simultaneously exploring partnerships with other nations to form a united front against the U.S.
- Rare Earths
- High-Performance Computer Chips
- Mutual Tariff Reduction
- USA
- China
- Trade Conflict
- London
- Stock Prices
- Peking
- Trade War
- Howard Lutnick
- Geneva
- US President
- Donald Trump
Enrichment Insights:
- The new agreement between the United States and China primarily focuses on implementing the basic deal that was reached in Geneva in May, aiming to address ongoing trade disputes between the nations.
- Both sides agreed to rollback actions taken since the initial deal was announced in May, signaling an effort to cool tensions and avoid further escalation.
- Many details remain unresolved, and the framework still needs final approval from both President Trump and Chinese leader Xi Jinping. Analysts note that without a direct meeting between the two leaders, the long-term stability of the agreement is uncertain.
- The London announcement does not mark a breakthrough but serves to reaffirm the commitment to the previously agreed de-escalation. Further rounds of talks may be required to address outstanding issues, but no specific plans for the next meeting were announced.
- The USA and China, in their latest agreement, have targeted the resolution of issues surrounding rare earths and high-performance computer chips as part of the new trade framework, crucial elements for various tech products and industry.
- As a result of the agreement, which was discussed in London, China hopes to see the USA lift export controls on high-performance computer chips and related technology, while the USA aims for mutual tariff reduction as a step towards normalizing trade relations with China.
- Stock prices in Hong Kong and Shanghai rose following the announcement of the agreement, highlighting the potential positive impact on business and finance, should the regions achieve a more stable trade policy with each other in politics and general-news.
