Trump's deal with Xi is a ceasefire, not an end to U.S.-China trade war

Like many of U.S. President Donald Trump’s deals, the one he is currently touting with China is thin on the details and thick on the hype.

Trump described his meeting Thursday with Chinese President Xi Jinping as amazing and rated it a 12 out of 10. He told reporters that China will buy “tremendous amounts” of soybeans. In a social media post, he floated the possibility of “a very large scale transaction” on oil and gas from Alaska.

But looking beyond Trump’s superlatives into what the two leaders specifically agreed to do, observers see this as more of a ceasefire in the trade war between the world’s two biggest economies rather than a full-fledged end to the hostilities.

The framework outlined officially by the U.S. and China really amounts to a pullback on some of the measures and retaliatory threats the two sides threw at each other since Trump returned to the White House.

Dennis Wilder, a professor at Georgetown University and a senior fellow in its China Initiative, says the U.S. and China have been testing each other’s mettle over the past months and fought to a draw.

“This is a pause in the trade war. It doesn’t mean that the trade war is over, I think we’re far away from that,” Wilder said in an interview Thursday with CBC News.

In exchange for a promise from Xi to crack down on the flow of chemicals used to make fentanyl, Trump agreed to reduce tariffs immediately on China’s exports to the U.S. by 10 percentage points.

“I believe [the Chinese] are really taking strong action,” Trump told reporters.

Canadians will notice Trump is reducing the tariff on Chinese goods by the same amount he’s increasing a tariff on Canadian products over his displeasure with the Ontario government’s anti-tariff TV ad.

Detente is conditional

Wilder says the U.S. “has been trying for a long time to get the Chinese to do something about fentanyl, and frankly, they have done very little.”

He says FBI director Kash Patel will give Beijing a list of what the Trump administration expects it to do to combat fentanyl trafficking. If there’s progress, the tariffs on China’s exports to the U.S. could be reduced further, but if not, the 10 percentage point reprieve will end.

China agreed to back off on its threat to tighten export restriction on rare earth minerals, key raw materials in the manufacture of high-tech goods ranging from fighter jets to smartphones.

Xi also agreed to call off the country’s boycott of U.S. soybeans. China’s move, in retaliation for Trump’s tariffs, had triggered significant anger in U.S. farming communities reliant on that $13 billion a year market.

Both the rare earth minerals and soybean measures are in reality a return to the status quo before Trump launched the trade war.

Meanwhile, the U.S. agreed to delay stricter export controls on high-end semiconductors and suspend port fees it had slapped on Chinese ships.

For Beijing, all this up to “a more or less total vindication of China’s strategy of never striking first but always striking back,” Joe Mazur, geopolitics analyst at the consulting firm Trivium China, told Reuters news agency.

The deal means the average tariff rate on most Chinese imports to the U.S. will now sit at 47 per cent, a dramatic climbdown from the 145 per cent tariff imposed for a month this spring.

Craig Kafura, director of public opinion and foreign policy at the Chicago Council on Global Affairs, a think tank, says Trump’s apparent softening in his approach to China will likely play well domestically given evidence that U.S. public opinion has started to sour on tariffs.

“If Trump backs off on some of these tariff policies, brings down the cost of imports, that’s a relatively easy sell to most Americans,” said Kafura in an interview with CBC News.

“It feels good to stop hitting yourself in the face,” he said.

What about Canada?

Kafura also thinks Canada could learn a thing or two from China about how to fight a trade war with Trump.

“The thing that the Chinese really brought to the table was leverage,” Kafura said, pointing particularly to Chinese monopoly on samarium, a rare earth mineral used extensively in military equipment.

“Does Canada have that much leverage over the U.S.?” he asked rhetorically. “No, but there are still points of leverage.”

Kafura says those points of leverage can found in the size and strength of the trading relationship between the two countries. The U.S. sells more goods and services to Canada than to any other country. The U.S. imports more crude oil, aluminum, potash and uranium from Canada than from anywhere else in the world.

By at least one measure, Trump’s tariffs have had the sort of impact he wanted. In June, imports from China sunk so low that the U.S. trade deficit with Beijing shrunk to a level not seen since 2004.

But it’s far from clear that the tariffs are triggering the kind of U.S. manufacturing revival he touted back in April, when he declared that factory jobs “will come roaring back into our country.”