The United States and China, the two largest economies in the world have reached a deal, to reduce the trade war that’s going on between them.
US President Donald Trump announced on Thursday that a trade deal with China had been reached. Although it provided few specifics, China’s Commerce Ministry said in a statement on Friday that some sort of agreement had been struck.
Since Trump returned to the White House determined to overturn a global trading system that he claims is unfair to the US and its workers, his trade policy has been characterised by abrupt changes and a lack of clarity.
His months-long conflict with China has mostly shown the extent of the suffering that the two nations are capable of inflicting on one another. Additionally, he has a deadline of July 8 to finalise deals with other major trading partners of the US.
Concerns regarding the prospects for the US economy have been increased by the ambiguity surrounding Trump’s dealmaking and the expense of the tariffs, which are paid by US importers and typically passed on to consumers.
Additionally, economists cautioned that the issues dividing Beijing and Washington are unlikely to be resolved very soon, even as they applauded the apparent reduction in tensions with China.
China has promised to facilitate US companies’ acquisition of rare earth minerals and magnets that are essential for manufacturing and microchip production, US Treasury Secretary Scott Bessent said in a statement on Friday. Amidst a tense trade war with the Trump administration, Beijing had reduced exports of the materials.
“China will, in accordance with the law, review and approve eligible export applications for controlled items. In turn, the United States will lift a series of restrictive measures it had imposed on China,” commerce ministry of China said, without specifically referring to US access to rare earths. In exchange, the US will remove many restrictions it had placed on China.
The US’ restrictions on exporting cutting-edge American technology to China have drawn criticism from the Chinese. However, it was not made clear in the ministry statement if the US intended to ease or lift such restrictions.
Bessent stated that the US has previously imposed “countermeasures” on China and “had held back some vital supplies for them” during his appearance on Fox Business Network’s “Mornings with Maria.”
“What we’re seeing here is a de-escalation under President Trump’s leadership,” he said.
Two days after the trade deal was reached, Jeff Moon, a former Obama administration trade official who now owns the China Moon Strategies firm, questioned why Trump had not revealed the specifics.
“Silence regarding the terms suggests that there is less substance to the deal than the Trump administration implies,” he said.