US Changes Attitude: Planning to Establish a More Constructive Relationship with China, Tariffs May Be Extended

The French newspaper "Les Echos" New York bureau reported on Friday (July 18) that the August 12 tariff deadline for China may be postponed. President Trump's attitude towards China seems to have softened, which is conducive to establishing a more constructive relationship with China.

The report points out that President Trump has been in office for six months and now hopes to establish a more constructive relationship with China. On Tuesday, he approved Nvidia's export of its artificial intelligence chips to Beijing, indicating an attempt to thaw this relationship. The two countries may simultaneously resolve a series of bilateral differences, and the United States may return to its strategy of isolating China to some extent.

Trump is not always moderate towards Beijing, his geopolitical rival. First, the tariffs during his first term. Then, his open anti-China stance during the campaign. Then, unilateral new tariffs, starting at 10%, then 20%, 54%, escalating to 145% in April, and reaching a fragile truce agreement in June.

The agreement reached in Switzerland on August 12 will expire. The tariffs on Chinese products will temporarily be reduced to 30%, theoretically rebounding, just like the temporary reduction of 10% on American products. Therefore, both countries are striving to reach a permanent agreement.

The August 12 deadline may be postponed

The report mentions that the US Treasury Secretary hinted on Bloomberg Television that the compromise in June might extend into the autumn to resolve all issues. "Since we have already reached an agreement on tariffs and export controls, we can move to the next stage of negotiations," said Bassett, "and discuss the opening of the Chinese market." He added, "Things are progressing very smoothly, and I told market participants not to worry about August 12."

Beijing hopes to get rid of the new 20% tariffs imposed due to selling fentanyl precursor chemicals to Mexico. These chemicals are smuggled into the United States. "China did provide help," Donald Trump told reporters on Wednesday, "we talked to them, and they are making great progress."

Tariff Comparison

The report believes that if Beijing achieves its goal, its "reciprocal" tariff level will be reduced to 10%, which is the base general tariff in the eyes of the president, the tariff he gave to the UK. However, it will also add about 25% tariffs that were unilaterally imposed on Chinese goods during his first term, which were not abolished by Biden.

In the context of a full-scale trade war, China only pays 10 percentage points more than Japan and South Korea, 5 percentage points more than the EU and Mexico, and the same as Canada. Of course, considering the volatility of tariffs, all these are just speculations.

Similarly, easing semiconductor export restrictions has broken the strategy of curbing China's military and industrial strength since the previous administrations. The Biden administration has increasingly targeted chips, software, and advanced equipment.

Easing Chip Restrictions

The report continued, stating that Bassett defended the resumption of exports of H20 chips to Beijing, arguing that "Huawei and other Chinese companies have upgraded and are now able to produce 'equivalent' chips." The government hopes to avoid a "Digital Silk Road" that would push the world to buy Chinese products.

Certainly, the government blocked these Nvidia chips in April, but "it was a bargaining chip in negotiations with the Chinese government in Geneva and London," the treasury secretary admitted. Bassett also admitted that American chips are part of the negotiation leverage to secure Chinese rare earths.

However, Beijing still holds some important cards. When China gradually approved the sale of key minerals to the US, the Geneva agreement almost collapsed. This sword of Damocles will continue to hang for years.

Panama Canal

Beijing has banned the Hong Kong consortium CK Infrastructure from selling its port in the Panama Canal to the US fund Blackstone and the shipping company MSC.

The report cited The Wall Street Journal disclosing on Thursday that the seller and two buyers understood they had no choice. But if China's shipping company COSCO gains 50% shares, as currently shown - right at America's doorstep! - Trump might be enraged, as he once promised to annex the canal.

Trump also plans to seek China's support to keep TikTok operating in the US. A bipartisan law passed in 2024 should have banned the Chinese social platform in January. He assured in late June that he had found an American buyer for TikTok, but needed Beijing's approval for the sale.

The report concludes that therefore, trivial issues intertwine with geopolitical considerations. Trump threatens to impose tariff sanctions on countries purchasing Russian oil and gas, which would affect China. Additionally, as the US urgently withdraws from Ukraine, military confrontations in the South China Sea are expected to intensify.

Nevertheless, even if Sino-US diplomatic relations improve, it will not create miracles.

Original: https://www.toutiao.com/article/1838073482767367/

Statement: The article represents the views of the author.