USD-CNY Standoff: Trump's "Tenacious" Xi Dims Deal Prospects
Trump dims prospects of accord with China
In a recent digital post, US President Donald Trump expressed little optimism that a trade deal with China is imminent. Despite expressing fondness for his counterpart, Chinese President Xi Jinping, he asserted that Xi's "tenacious" demeanor makes striking a deal extremely difficult.
This renewed discord between the two economic titans stems from mutual accusations of non-compliance and the imposition of additional restrictions. While the US and China appeared to be easing tensions in mid-May, recent events have reignited the trade war, with the US blocking the shipment of vital turbine parts to China and attempting to restrict China's access to crucial chip technology.
China, in turn, faces allegations of hoarding essential minerals required in the automotive industry, putting global manufacturers at a disadvantage. The exact cause of Trump's latest remarks is unclear, but earlier in the week, it was reported that he and Xi may engage in talks this week.
Before these reports surfaced, Bloomberg announced that China might acquire hundreds of aircraft from Airbus during a visit from European heads of state in July. This potential deal would intensify tension between Boeing, the US aircraft manufacturer under pressure in China, and its strongest competitor, Airbus.
Economy & Allegations
US Accusations:- The US has claimed that China has violated the trade agreement by failing to remove non-tariff barriers, as agreed upon. These breaches are detailed by both Trump and U.S. Trade Representative Jamieson Greer, although they provide no specific examples.- One particularly contentious issue centers around China's export rules for rare earth minerals, which it controls 90% of the world's production capacity. This dominance is significant for US national security and economic growth.
China's Accusations:- China accuses the US of violating the temporary trade agreement by implementing AI chip export control guidelines, suspending the sale of chip design software to China, and plans to revoke Chinese student visas. Beijing views these actions as actions that undermine the consensus reached during the Geneva trade talks.- Specific instances of these actions include the US's implementation of guidelines restricting the export of AI chips to China, halting the sale of chip design software to China, and the proposed revocation of Chinese student visas, all of which strain technology trade relations.
While tariff reductions were part of the temporary agreement, both parties have yet to fully comply, with the US lowering its tariffs on Chinese goods from 145% to 30%, and China reducing its tariffs on US goods from 125% to 10%. These underlying tensions and accusations of non-compliance persistently escalate the trade conflict between the two nations.
The community and employment policies of both the United States and China are likely to be affected by the ongoing trade standoff, as increased tariffs and restricted trade could impact the job market and businesses in both countries.
The ongoing trade dispute between the US and China, characterized by mutual accusations of non-compliance and the imposition of additional restrictions, has financial, business, political, and general-news implications, with potential effects on global markets and international relations.
