Wednesday, 10 September 2025
Jakarta
--:--
Tokyo
--:--
Hongkong
--:--
New York
--:--
US-China Trade Deal Delays Resolution Of Rare Earths Issue
Thursday, 12 June 2025 20:06 WIB | ECONOMY |ECONOMIC

A tentative agreement between the United States and China may be a step back from the worst-case scenario of a complete collapse of trade between the world's two largest economies, but it creates more problems than it solves.

President Donald Trump has hailed the deal, which is still awaiting final approval from both sides, as a "great deal" that will benefit both countries.

While not all the details are known, what has been revealed suggests a deal that will likely hurt both economies and fail to address some pressing issues, such as China's dominance of the rare earths supply chain.

The United States would impose tariffs of 55 percent on imports from China, while China could impose tariffs of 10 percent on its purchases from the United States.

That would still be a sharp increase from the 25 percent tariffs on Chinese imports that were in effect when Trump returned to the White House in late January.

Tariffs at that level would likely be high enough to cause trade to shrink while also raising inflation in the United States and lowering economic growth in both countries.

If Beijing were to stick with 10% tariffs on U.S. energy imports, they would be high enough to ensure that virtually no U.S. crude oil, coal or liquefied natural gas would enter China, eliminating one of the few products that China can buy in large quantities from the United States.

It's also questionable whether the tariffs would be enough to encourage more manufacturing in the United States, or whether they would simply cause some production to shift from China to countries with lower tariffs.

Trump did specifically mention rare earths when discussing the trade deal, saying China would provide the metals found in a wide range of electronics and vehicles "up front."

But the deal does little to address the underlying problems with rare earths, magnets and other refined metals such as lithium and cobalt, which are dominated by Chinese supply chains.

At best, this week's deal is a delaying settlement, insofar as it averts an immediate manufacturing crisis in the United States but leaves open the possibility that Beijing could once again threaten supply if problems arise between the two sides in the future.

China controls 85% of global rare earth refining, a situation that has so far largely benefited Western companies because they can obtain the metals at prices far lower than they would have to pay if they tried to mine and process the elements themselves. (alg)

Source: Reuters

RELATED NEWS
Breaking News: US Annual PPI Inflation Falls to 2.6% in August, Compared to an Expected 3.3%...
Wednesday, 10 September 2025 19:39 WIB

Producer inflation in the United States, as measured by the change in the Producer Price Index (PPI), fell to 2.6% annually in August from 3.3% in July, the U.S. Bureau of Labor Statistics (BLS) repor...

US Nonfarm Payrolls benchmark revision points to 911,000 decrease in March 2025 level of employment...
Tuesday, 9 September 2025 21:13 WIB

The US Bureau of Labor Statistics reported on Tuesday that the preliminary estimate of the Current Employment Statistics (CES) national benchmark revision to total Nonfarm employment for March 2025 is...

Potential Trump tariff refund bill could top $1 trillion as Supreme Court fight looms...
Tuesday, 9 September 2025 05:05 WIB

The United States government has already collected tens of billions of dollars from President Donald Trump's "reciprocal tariffs." But that money and a lot more could end up being refunded if the Sup...

Putin says foreign troops in Ukraine would be legitimate targets...
Saturday, 6 September 2025 01:10 WIB

Ukrainian President Volodymyr Zelenskiy said on Friday thousands of foreign troops could be deployed to his country under post-war security guarantees, but Russian leader Vladimir Putin said Moscow wo...

U.S. adds 22,000 jobs in August...
Friday, 5 September 2025 20:07 WIB

The U.S. economy added fewer jobs than anticipated in August, possibly bolstering the case for the Federal Reserve to slash interest rates at its next policy meeting later this month. Data from the L...

LATEST NEWS
Gold Nears Record High Amid Weakening US Inflation and Geopolitical Tensions

Gold surged near a record high of $3,650 an ounce on Wednesday (September 10) after an unexpected decline in US producer prices reinforced expectations that the Federal Reserve will continue cutting interest rates at its meeting next week. Both...

Oil Prices Rise, Traders Weigh Trump's Tariff Threats and Fed Outlook

Oil prices rose for a third straight session as investors weighed President Donald Trump's latest tariff threats against buyers of Russian crude, the impact of the Israeli strikes on Doha, and the prospect of a US interest rate cut. Brent traded...

Breaking News: US Annual PPI Inflation Falls to 2.6% in August, Compared to an Expected 3.3%

Producer inflation in the United States, as measured by the change in the Producer Price Index (PPI), fell to 2.6% annually in August from 3.3% in July, the U.S. Bureau of Labor Statistics (BLS) reported on Wednesday. This figure was lower than...

POPULAR NEWS
Will Nonfarm Payrolls revisions hint at a 50 bps Fed cut next week
Tuesday, 9 September 2025 04:05 WIB

The United States (US) Bureau of Labor Statistics (BLS) will publish the 2025 preliminary benchmark revision to the Establishment Survey Data on...

Russian Forces Attack Power Plant In Kyiv Region, Ukraine's Energy Ministry Says
Monday, 8 September 2025 17:12 WIB

Russian forces attacked a thermal power plant in the Kyiv region as part of an overnight attack, Ukraine's Energy Ministry said on Monday,...

US Nonfarm Payrolls benchmark revision points to 911,000 decrease in March 2025 level of employment
Tuesday, 9 September 2025 21:13 WIB

The US Bureau of Labor Statistics reported on Tuesday that the preliminary estimate of the Current Employment Statistics (CES) national benchmark...

European shares end higher amid all eyes on French no-confidence vote
Tuesday, 9 September 2025 01:52 WIB

European shares finished higher on Monday, while French stocks also rose as investors stayed calm in the run-up to a no-confidence vote later in the...