Donald Trump’s meeting with Xi Jinping on Thursday morning may not have been quite as “amazing” in its outcome to warrant his score of 12 out of 10. But the one-year deal they agreed will bring relief to Chinese exporters, American farmers and manufacturers and markets all over the world.
Trump’s decision to halve the levy he imposed on China over its failure to prevent the export of chemicals used to make the drug fentanyl brings the tariff on most goods down from 57 per cent to 47 per cent. Chinese exporters were already learning to live with the higher tariff but the cut will be welcome, bringing the Chinese tariff closer to that borne by some of its neighbours in southeast Asia.
China’s pause on introducing sweeping new restrictions on the export of rare earths, which would have required licences to export products including tiny amounts of the minerals, is important not just for the US but for the European Union too. Ursula von der Leyen, who threatened last week to use all the tools in the EU’s toolbox to retaliate against the measures, will be relieved not to have to follow through.
The US pause on expanding its entity list to sanction subsidiaries of Chinese companies abroad could offer the Dutch government a way out of the mess it has created by taking over the chip company Nexperia. Beijing retaliated by halting the export of the company’s chips, which are packaged in China – a move that threatens to halt production in car plants across Europe.
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The Dutch move was preceded by a US threat to add Nexperia to the entity list, although the authorities say they had other security concerns. One way or another, they might welcome an opportunity to make an elegant retreat.
Trump and Xi did not discuss Taiwan, and although China has agreed to buy more energy from the US, that will not necessarily mean buying less from Russia. And while Xi said he wanted to work with Trump to tackle the world’s problems, there is no immediate prospect of them doing so.
Perhaps the most important announcement was Trump’s confirmation that he will visit China next April and that Xi will go to the US later next year. This means that the year during which the agreement is to operate will be punctuated by summits that both sides will want to succeed.
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Trump’s openness to engaging with Xi has unnerved the China hawks who have dominated a bipartisan consensus on Capitol Hill and in Washington think tanks for a decade. Beijing has quietly dropped the “Wolf Warrior” diplomacy that saw it falling out with everyone from Canada and Australia to Norway and Lithuania earlier this decade.
Thursday’s meeting in Busan suggests that both Xi and Trump are ready to move relations into a less confrontational mode, at least in the short term. This will give both sides the time they need to be less dependent on one another and better prepared when the mood sours again.
