My Take | China and US manage to avoid a lose-lose trade war, for time being
Trump will probably sign some modest deals, and maybe with Beijing, but it could have been done without threatening to destroy world trade
In the end, China called Washington’s bluff, and the need for self-preservation prompted both sides to de-escalate as quickly as they pushed each other towards the brink of a full-blown trade war.
Nationalists on both sides will be shouting loudly that the other side blinked first. Regardless, the Donald Trump White House wanted to start a revolution in the world trade system but ended with a good old fashioned ceasefire. And he didn’t even get any concessions other than a lowering of Chinese retaliatory tariffs.
Instead of debating which side has scored a win, let’s just say both sides have avoided a lose-lose, for now. After all, it’s a three-month pause, and there is no guarantee they will reach a general agreement at the end of it.
Beijing took a leaf from America by weaponising a key industrial sector – rare earth supplies – in its tit-for-tat with Washington.
Rare earths, as everyone knows by now, are anything but rare. What is different about China is that it has built up the entire extraction, processing and supply chains so that it dominates about 90 per cent of the market.
In early April, China pushed the nuclear button. Along with cancelling purchases of aircraft from the already beleaguered Boeing, Beijing ordered severe export restrictions on rare earth metals and magnets that are critical to modern electronics, from cars and planes to computer chips and smartphones.
Industry insiders in the United States said they were weeks away from running out of supplies and would have to halt production and even start laying off workers.