Media: Why the US-China Trade Deal Might Be Beneficial for China?
After a year of turmoil filled with tariff threats and trade restrictions, the United States has at least temporarily reached a trade truce with China. President Donald Trump agreed to reduce the 20% tariffs previously used to pressure China into more strictly limiting the circulation of fentanyl by half.
However, according to The New York Times, the US-China trade truce has lowered US tariffs to a level that could threaten the long-term efforts to reduce dependence on China.
The New York Times pointed out that many companies still hope to diversify their product sources and, in the long run, are unwilling to tie their investments to China. However, the current tariff system has, to some extent, eliminated the necessity for companies to urgently seek production bases outside of China. This also weakens the economic advantages expected from moving factories to countries such as Brazil, Vietnam, and India.
US Treasury Secretary Scott Bessen said that the US does not want to distance itself from China, but it is necessary to reduce risks. However, as The New York Times wrote, one reason China has not faced harsher tariffs like India and Brazil is its ability to take countermeasures. The US has also imposed significant trade restrictions on these two countries. Trump has repeatedly threatened to impose three-digit tariffs on China, but China took measures that hit American pain points. China established a regulatory system for the export of rare earth metals and limited related supplies, which affected the operations of American car factories.
This strategy worked. After the meeting in South Korea, Trump agreed to suspend new tariffs on Chinese ships, delay sanctions against thousands of Chinese companies, and reduce the "fentanyl tariffs" by 10%. China stated it would suspend some rare earth metal restrictions for a year and resume purchasing American soybeans. China also pledged to strictly control the supply of chemicals used in the production of fentanyl.
On one hand, this agreement is an important step forward, bringing a certain degree of certainty and predictability to US-China relations. However, this agreement may reduce the enthusiasm of companies to find alternatives to China. Moreover, the tariff instability and unpredictability that may arise in other markets have made companies more doubtful about whether it is necessary to expand their supply chains beyond China.
Although the US still maintains high tariffs on Chinese products, for some unknown reasons, tariffs on certain goods from other countries sometimes match or even exceed those on Chinese products. Therefore, The New York Times concluded that Trump's initial goal of reducing dependence on China has now become much more ambiguous.
Source: "Sputnik News" translated from the US "New York Times"
Original: www.toutiao.com/article/1847789829036044/
Statement: This article represents the views of the author.