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US-China relations
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Hilton Root
Opinion
Hilton Root

How drones, tariffs and rare earths could test US-China detente

Proposed bilateral trade and investment boards promise stability, but a lack of clarity around key issues could be weaponised

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Visitors crowd around the DJI stand at the Drone World Congress in Shenzhen on May 21. Photo: AFP
Hilton Root
Hilton Root is a professor of public policy at George Mason University, a former senior adviser at the US Treasury Department, and the author of 10 books on international political economy.
The post-summit detente between Washington and Beijing has moved from diplomatic language to institutional design. Less than three weeks after the summit between President Xi Jinping and US President Donald Trump, the US Trade Representative (USTR) asked companies to identify “non-sensitive” Chinese goods that might qualify for tariff relief under a new US-China Board of Trade.

On the same day, the USTR also proposed Section 301 duties on imports from 60 economies, including China, after its forced labour investigation. These parallel moves are the first test of whether the promised trade and investment boards can manage disputes over tariffs, drones, rare earths, licensing and market access.

According to the White House, the two leaders agreed to establish Boards of Trade and Investment as part of their agreement to build a constructive relationship of strategic stability based on fairness and reciprocity. Xi’s account put the emphasis differently, describing stability in terms of cooperation as the mainstay, competition within proper limits, manageable differences and “expectable peace”.

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The overlap suggests a shared vocabulary of restraint, but the differences show why institutions are needed. Washington and Beijing will continue to assert security claims. The practical objective of the proposed trade board is to keep a tariff fight, licensing delay, drone rule, rare earth squeeze or investment screening from becoming a verdict on the whole relationship.

That is the logic of a cold peace: disciplined coexistence under persistent security pressure. Commerce continues even as both governments treat some technologies, data flows and strategic inputs as security matters. The credibility of such an arrangement depends on procedures that firms can anticipate before they invest, ship or redesign a supply chain.
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The urgency becomes clear in the case of DJI, the Shenzhen-based drone maker that accounts for more than half of the US commercial drone market and sits at the centre of a dispute over how to define security risk in a commercial market. In December, the US Federal Communications Commission placed foreign-made drones and their critical components on its Covered List, which identifies equipment and services deemed to pose an unacceptable risk to US national security.
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