US and China aim to resolve new disputes and temporarily halt tariffs
US-China trade discussions in London aim to address new conflicts and establish a temporary ceasefire on tariffs. This week in London, US-China trade discussions are anticipated to address a number of new conflicts that have strained relations, jeopardizing a delicate ceasefire regarding tariffs. In Geneva last month, both parties reached an agreement to implement a 90-day suspension of the majority of the tariffs exceeding 100 per cent that they had levied against one another, amidst a trade conflict that had raised concerns about a potential recession.
Since then, the US and China have engaged in a heated exchange regarding advanced semiconductors that drive artificial intelligence, rare earths essential for car manufacturers and various industries, and the issuance of visas for Chinese students attending American universities. President Donald Trump engaged in an extensive phone conversation with Chinese leader Xi Jinping last Thursday, aiming to realign bilateral relations. Trump declared on social media the following day that trade discussions would take place on Monday in London. Technology represents a significant point of contention. The most recent tensions emerged merely a day following the May 12 declaration of the Geneva agreement to suspend tariffs for a duration of 90 days.
The US Commerce Department has provided guidance indicating that the utilization of Ascend AI chips from Huawei, a prominent Chinese technology firm, may contravene US export controls. The guidance indicated that the chips were probably developed using American technology, notwithstanding the restrictions on their export to China. The Chinese government expressed dissatisfaction. One of its most significant grievances in recent years has been regarding US actions to restrict the access of Chinese companies to technology, particularly concerning the equipment and processes essential for producing the most advanced semiconductors. “The Chinese side urges the US side to immediately correct its erroneous practices,” a Commerce Ministry spokesperson said.
US Commerce Secretary Howard Lutnick was absent from Geneva but is set to participate in the discussions in London. Analysts indicate that this implies a certain openness on the part of the US to consider China’s concerns regarding export controls. China exhibits indications of a reduction in restrictions on rare earths. China possesses a significant advantage in the mining and processing of rare earths. They are essential not only for automobiles but also for a variety of other products, including robots and military equipment. In April, the Chinese government implemented a requirement for producers to secure a license for the export of seven rare earth elements. Resulting shortages sent automakers globally into a state of disarray. As stockpiles diminished, concerns arose regarding the potential need to cease production.
Trump, while not explicitly referencing rare earths, utilized social media to launch an attack on China. The unfortunate development is that China, perhaps unsurprisingly to certain observers, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US, Trump posted on May 30.
The Chinese government signaled on Saturday that it is responding to the concerns raised by European companies as well. A statement from the Commerce Ministry indicated that it has granted certain approvals and will persist in enhancing the approval process for applications that adhere to regulations. The effort to address the rare earth issue illustrates that China possesses a significant leverage point should it choose to retaliate against tariffs or other actions.
The proposal to revoke student visas contributes to escalating tensions. Student visas typically do not play a significant role in trade discussions; however, a recent US declaration regarding the revocation of visas for certain Chinese students has surfaced as yet another complication in the bilateral relationship. Last week, when questioned about the allegation of violating the consensus established in Geneva, China’s Commerce Ministry brought the matter to the forefront. The response indicated that the US had compromised the agreement by implementing export control guidelines for AI chips, halting the sale of chip design software to China, and announcing its intention to revoke Chinese student visas.
The United States has independently instigated fresh economic and trade tensions, the ministry stated in a release on its website. US Secretary of State Marco Rubio stated on May 28 that the United States would take decisive action to revoke visas for Chinese students, particularly those with ties to the Chinese Communist Party or enrolled in essential fields of study. In the 2023-24 academic year, over 270,000 Chinese students pursued their studies in the United States.
