After two days of tense negotiations, the United States and China seem to have retreated from the edge of a devastating economic conflict … maybe.
Officials from both countries reached a verbal agreement in the early hours of Wednesday in London to eliminate some of the harmful measures they had used to attack the economies of the other as part of a confrontation that quickly intensified in recent months.
It is not yet clear if the truce will remain, or if it will fall apart as it happened in May. Even if the agreement is lasting, its great achievement seems to simply return to countries to status quo Several months ago, before President Donald Trump caused tensions with China in early April by increasing tariffs on the goods it produces.
“It seems as if we were negotiating in circles,” said Myron Brilliant, senior advisor to DGA-Albright Stonebridge Group and former executive president of the United States Chamber of Commerce.
“It intensifies, it goes back,” he added. “After all, we are not really more advanced.”
As a result of this week’s negotiations, tariffs will stay where they are. There are hardly more details, apart from the probable setback of the aggressive policies that both countries have adopted since May.
China is expected to relax the export restrictions of minerals that had threatened to paralyze a series of American manufacturers. In return, the United States will relax the new limits imposed on its own exports of technology and products, and will withdraw their threats to cancel visas to Chinese students in the United States.
Countries did not announce advances in other commercial issues. These issues would be left for future discussions, American officials said.
For many analysts, London’s meetings raised questions about what had won exactly with Trump’s aggressive commercial tactics against China in recent months, or if their actions had finally been counterproductive.
“What are we getting exactly that we were not getting before?” Veronique de Rugy, principal researcher at Mercatus Center, a laboratory of libertarian ideas. “This agreement suggests that there was never a real plan.”
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Trump government officials have argued that the United States has won the recent climbs, stating that the punitive measures issued in response to China’s cuts to rare earth exports show that the country has much of its own power. In recent weeks, the United States limited access to a series of computer programs, products, chemical substances and technologies, including crucial elements that China uses to develop advanced chips and reaction engines.
The Government has also pointed out the strength of the US economy and limited inflation to argue that even very high tariffs on Chinese imports have had few negative effects.
Other analysts have not been so optimistic. In a report this week, the World Bank said that American tariffs would lay the foundations for the weakest world growth since the sixties.
Trump proclaimed on social networks on Wednesday morning that “our agreement with China is made” and that the “relationship is excellent”, although he acknowledged that the agreement was still subject to his final approval and his counterpart, Xi Jinping.
“All magnets, and the rare earths that are necessary, will be supplied, in advance, by China,” he wrote in capital letters. “Similarly, we will provide China agreed, including Chinese students who use our schools and universities (what has always seemed good to me!)”
The discussions in London extended for two long days and nights, and repeatedly they became heated, according to two people with knowledge of the meetings. In several moments, the conversations seemed about to fail, they added, which is a sign of the lack of confidence between the two governments.
Howard Lutnick, secretary of Commerce, who participated in the negotiations, said that the fundamental objective of the president to China was to “reduce the commercial deficit and increase trade.”
“But first we had to eliminate, in a way, negativity,” he said at the end of conversations. “Now we can advance to try to make a positive trade, a growing and beneficial trade for China and the United States.”
Liu Pengyu, a Chinese embassy spokesman in Washington, said Wednesday that the essence of relations between the two countries resided in mutual benefit and cooperation. “There are no winners in commercial wars,” he added. “China does not seek the conflict, but it will not be intimidated by it.”
Analysts and experts said that the events of recent weeks showed that Trump’s government had exaggerated his position against China. The United States has an almost immediate economic need for minerals and rare earth magnets produced by China. Chinese restrictions on these exports forced car manufacturers and other industries to press the White House to relieve them, and finally threatened to exhaust the existences of US military material.
Without a doubt, the restrictions imposed on China in return would also be painful for the Chinese economy. But some analysts stressed that they would also inflict hardships to the United States.
Philip Luck, director of the Economics Program of the Center for Strategic and International Studies, a Laboratory of Ideas by Washington, wrote in a recent analysis that US restrictions on ethane exports aimed at China had been especially counterproductive. They forced, for example, the main US energy companies to stop exports planned for the value of billions of dollars. With the cut -cut, Chinese plants could simply burn other fuels that they can obtain in other places, which cost more but would avoid any interruption.
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“These controls do not even exceed the lowest bar for an economic weapon,” Luck wrote. “Beyond harming US producers rather than their Chinese counterparts, the government’s energy domain agenda undermine and point to allies that you cannot trust the United States even in the supposedly apolitical raw material markets.”
Icharia Mazzocco, principal researcher at the Center for Strategic and International Studies, said that tariff threats and other policies had been guided by Washington’s theory that “China would give in to the pressure very quickly”, partly because its economy, driven by exports, has been showing signs of weakness.
“I think what China has shown is that, in reality, it is in a fairly strong position and can endure many hardships, and perhaps more hardships than the United States,” he added. He also said that China had demonstrated his ability to use exports controls to inflict damage to the United States in a way that he had never addressed before.
Jin Canrong, Professor of International Studies at the Renmin University of Beijing, wrote in a comment last week that the rare earths were “an ace under China’s sleeve.”
“Trump should understand that pressure and threats are not definitely the correct way to deal with China,” he wrote.
Some analysts have also questioned the precedent that the Trump government sat to put American export controls, which are usually considered a issue of national security, rather than economic influence.
Wendy Cutler, vice president of the Asian society and former American commercial negotiator, said that the United States “seems to have paid a high price” for recovering access to Chinese minerals and magnets.
“These issues have deliberately remained outside the negotiating table for years, given the American insistence that the measures related to national security are not appropriate for a shot and daca,” he said. “By now seemingly investing this position held for so long, the United States has opened a door to China that will be difficult to close.”
He added that China could now insist on bidirectional concessions on the control of exports in the future. “The framework of the London agreement can mean an important turning point in economic relations between the United States and China,” he said.