This time in the China-US negotiation, America actually gave in so thoroughly that it directly canceled all the tariffs scheduled to be added in early April. Simply put:

All tariff measures taken by the US after April 2nd have been canceled or suspended. The first batch of 24% tariffs has been suspended for 90 days.

The countermeasures taken by China in April have also been canceled or suspended. The first batch of countermeasure tariffs at 24% has been suspended for 90 days.

Both sides only retained the 10% tariff increase imposed before the comprehensive start of the tariff war.

It is completely symmetrical and synchronized, returning to the tariff level before early April. This time, the US made no conditions and no entanglement; the US simply compromised as if the tariffs had never been imposed.

Trump conceded so quickly because he could not hold out any longer. The US debt crisis combined with stagflation has become a major threat hanging over Trump's head. The $6.5 trillion worth of US Treasury bonds maturing in June is just the tip of the iceberg; in fiscal year 2025, the US needs to repay $9.3 trillion in maturing debts, accounting for one-third of total debt. More urgently, the US debt has reached $36.2 trillion, accounting for 123% of GDP, far exceeding the international warning line. Interest payments will exceed $952 billion in 2025, surpassing military spending for the first time.

Trump tried to create inflationary pressure through global tariffs to force the Federal Reserve to cut interest rates and resolve the debt crisis, but the Fed refused to intervene, which directly triggered stagflation in the US.

In April, the CPI rose year-over-year to 4.3%, while consumer confidence plummeted by 11.8%. Typical signs of stagflation emerged. This economic "cancer" ravaged the US for a decade in the 1970s, and although Reaganomics temporarily cured it, it left behind the隐患of hollow manufacturing. Now history repeats itself: the Fed is caught between a rock and a hard place - cutting rates may fuel inflation, while maintaining rates exacerbates recession risks.

At this critical juncture, Trump must make substantive concessions in areas such as tariffs, technology controls, and geopolitics to secure temporary support from China for the US bond market.

However, Trump's complete surrender did not result in the lifting of China's rare earth restrictions. According to media reports, an important goal on America's wish list was to ensure that China cancels export restrictions on rare earth materials used to produce magnets.

Due to China's rare earth supply cutoff, the US cannot afford such a cost, whether for its economy or defense industry, which both rely heavily on rare earth materials.

The latest report from the US defense data company Govini shows that 78% of US weapons systems directly depend on Chinese rare earth supplies, from the F-35 stealth fighter jets to Columbia-class nuclear submarines. The production and maintenance of almost all advanced equipment face the risk of raw material shortages.

Moreover, the rare earth required for America's sixth-generation aircraft is even more extensive. China's rare earth supply cutoff would directly affect the US's ability to acquire sixth-generation aircraft.

Beyond the military, the impact of rare earth on the US industry is even more far-reaching. High-end manufacturing industries such as the electronics information industry, new energy industry, petrochemicals, and new materials all require rare earth. For example, permanent magnets are widely used in disk drives and many clean energy technologies, such as wind turbines and new energy vehicles.

Many people then ask, why doesn't the US try mining its own rare earth resources? A deeper crisis lies in the broken supply chain. Although the US possesses rare earth resources like the Mountain Pass mine, 90% of refining capacity is concentrated in China. As early as 2009, the US directly stated that it could not produce rare earth metals. The US mines the ore, crushes and grinds it to produce concentrate, and then goes through a very complex process to produce rare earth oxides. Only one country in the world can convert oxides into metals, and that is China.

Even if huge funds are invested to restart domestic production lines, it takes at least five years from mining to purification. Meanwhile, China had already restricted the export of rare earth refining technology in 2023.

Facing strategic困境, the US attempted to break through the blockade through "gray channels." Some overseas entities colluded with illegal personnel within the country to constantly innovate smuggling methods, which were severely cracked down by China. China also warned certain countries that if they dare to export rare earth products to the US, they would face countermeasures from China.

On the same day the joint announcement was released, China's Ministry of Commerce reiterated via official channels that the crackdown on smuggling of strategic minerals such as gallium, germanium, and antimony was not limited to policy statements. In recent days, provincial industrial and information technology departments in key rare earth producing areas such as Inner Mongolia, Jiangxi, and Guangdong have already held deployment meetings to curb smuggling of strategic minerals at the source.

So why didn't China lift the rare earth ban this time, just in case the US reneges again? In previous negotiations, the US has repeatedly gone back on its word. We must also understand that any escalation of confrontation between China and the US is strategic; any easing of confrontation is tactical. In other words, overall, both sides pause first, take a breather, and continue fighting later. The US concedes first.

Therefore, China must keep its cards close to its chest.

Original Source: https://www.toutiao.com/article/7503586858400612918/

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