Be very wary of US-China trade ‘deal’ déjà vu

The United States and China appear to have hammered out the framework of a trade deal in advance of Presidents Donald Trump and Xi Jinping’s expected meeting tomorrow on the sidelines of the Asia Pacific Economic Cooperation (Apec) Summit, in South Korea, removing the threat of an imminent collapse in trade between the world’s two largest economies.

- Jamie McGeever

US President Donald Trump, during his first term, and China's President Xi Jinping shake hands after making joint statements at the Great Hall of the People in Beijing, China, on Nov 9, 2017.

(REUTERS)

World markets have welcomed the news, but, far from a game changer, this just looks like déja vu.

Remember this?

“OUR DEAL WITH CHINA IS DONE, SUBJECT TO FINAL APPROVAL WITH PRESIDENT XI AND ME,’ Mr Trump wrote on Truth Social on June 11, adding: “RELATIONSHIP IS EXCELLENT!”

As it turned out, the deal was not done, and the relationship was not excellent.

So much so, an emboldened Beijing earlier this month put extra controls on rare earth exports, and Washington responded with threats of 100% tariffs on US-bound shipments of goods from China. US Treasury Secretary Scott Bessent also publicly criticised top Chinese trade negotiator Li Chenggang as “unhinged”.

However, the two men appear to have put these differences aside following talks in Malaysia over the weekend, agreeing to the roots of a preliminary deal in which China will delay its expanded licensing regime for rare earths and the US will drastically lower its threatened tariffs on Chinese goods.

Soundings from the White House are upbeat, while the Chinese side is taking a more cautious line.