Sino-US Trade Talks:
- April 23, Washington DC (Preparatory talk)
- May 12, Genova (Main Talk)
- May 15, Jeju Island (Low level meeting)
- Jun 10-11, London (Main Talk)
On April 23, a brief one-hour meeting was held to decide the time and location for formal negotiations. The key takeaway was a U.S. request to upgrade China’s representative, stemming from the 2018 Trade Talks where Trump observed that the Chinese delegate lacked full decision-making authority.
On May 12, the Chinese delegation, led by the Finance Minister, walked out just 20 minutes into the session, citing the U.S. position as overly rigid and insincere. However, both sides later urged their teams to remain patient and resume dialogue. After lunch, the Chinese side returned, claiming they had only left for lunch. A temporary agreement was reached: the U.S. would pause tariff escalation for 90 days in exchange for resumed rare earth exports from China. Tariffs were adjusted from 145% to 30% by the U.S., and from 125% to 10% by China.
The May 15 meeting received little public attention, as it focused solely on the technical implementation of the rare earth export process.
The purpose of the “London Talks” was to address U.S. accusations that China had not fulfilled its promise on rare earth exports. In response, the U.S. imposed bans on Chinese students and exports of C919 jet engine parts and ethane. Once China resumed exports, the U.S. lifted the bans. However, uncertainty remains about what will happen once the 90-day ceasefire ends.
In 2010, China restricted rare earth exports to Japan during the Diaoyu/Senkaku Islands dispute. Japan responded by stockpiling, developing alternatives, and diversifying imports. The U.S., however, did not adapt and was left vulnerable. Trump later signed a deal with Ukraine for rare earth mining, though production will take years.
Japan learned from 2010. The U.S. did not.
Trump initiated the tariff war due to the U.S.’s significant trade deficit with China. Interestingly, the first country to sign a trade agreement with the U.S. was the U.K., with which the U.S. runs a trade surplus. When China objected, Trump slashed tariffs from 145% to 30%, and China reciprocated from 125% to 10%, creating a net difference of only 20%.
This set a precedent: other countries now hesitate to make agreements, hoping to gain similar concessions by pushing back. This phenomenon has been dubbed “TACO” – Trump Always Chickens Out. If the largest deficit country only faces a 20% effective rate, others expect even better terms.
Trump wasn’t defeated by China – he was defeated by his own strategy.
Under President Biden, sanctions on chips and advanced tech intensified. Now, Trump is easing them to secure rare earth supplies. Without the tariff war, sanctions would likely be tighter. As a result, NVIDIA CEO Jensen Huang is creating a special chip (B20) tailored for China. In the Biden era, only chips like H100, B100, H800, and B800 were available. Now, more custom chips are on the way – NVIDIA has even opened a research center in Shanghai.
Watch NVDA and chip-related stocks like AMD and TSM. Don’t forget my personal picks: PLTR, DXYZ, TEM, SOFI, and ARKW – especially DXYZ, which I bought on April 7, the bottom of a V-shaped rebound.