Donald Trump tries to sell the most recent truce in the tariff wars with China as a win. But anybody who looks at the details of the deal must conclude that China is really the winner. By simply reminding the US of how dependent it’s economy and technology, including defense technology(!) is on the rare earth minerals China effectively controls, Trump was forced to cut his beloved tariffs in half and give up on the planned controls over technology exports to China.
It is basically very simple: At least since the Deep Seek AI model surprised the tech world, it has been obvious that China can develop quite well even without top grade US technology. Admittedly, it would develop faster if it had unfettered access to US technology, but moving slightly slower based on its own domestic technology is not a very large handicap for China. The US, on the other hand, is highly dependent on the rare earth minerals China supplies. If these minerals are not available to the US, the US tech boom will not only be slowed down, it will come to a screeching halt.
It will take decades and Billions, if not Trillions of Dollars for the US to develop its own domestic rare earth industry. Furthermore, mining and refining rare earth minerals is an extremely dirty business. The environmental impact is considerable, and I don’t think there are many places in the US that would welcome a rare earth mine or refinery in their back yard. This is why Trump is trying to convince other friendly nations, such a Thailand, for example, to develop rare earth minerals for export to the US.
Chinese leader XI played his cards well. By only “suspending”, not cancelling the additional export controls on rare earth minerals, he has made sure that the US knows who is the boss. These export controls can be put back in place at a moment’s notice, if Trump should have another one of his impulses that lead him to try to punish China for a perceived slight. I sure hope Trump gets this message.
The only other concession Trump got out of Xi is a vague promise to start purchasing US Soya beans again. This is not a win, only a return to the status quo that was in effect before Trump started the trade war. China has since developed trading relations with Brazil and is importing soyabeans from that South American country. How much of these purchases will now be switched back to the US and at what price is an open question.
Vague promises of this kind are a hallmark of virtually all of Trump’s trade deals. The trading partners have come to realize, that such promises are necessary, so that Trump can claim a win, even though the true winner is usually the other party. Trump is exceedingly vain. The art of dealing with him is simple: Let him have a cheap win so that he can brag. If you do that it is much easier to remain firm on the substance.