US vs China: trade war over?
During negotiations in London, the US and China have agreed on a framework for a deal in their trade dispute. According to US President Trump the deal foresees tariffs of 55 percent on Chinese imports to the US, with 10-percent tariffs on US imports to China. Mutual export restrictions on rare earths and high-tech products are also to be lifted. The media take stock.
End of the Golden Age
The era of globalised free trade is over, notes Corriere della Sera:
“Major US banks expect tariffs to average 15 percent by the end of the year (with exceptions for a few sectors such as steel). That's far less than what was threatened on 2 April, 'Liberation Day', but it's still six times the initial average rate of 2.5 percent. There's no going back to the golden age of open borders, for which, at least in the US, there is no social consensus. Truces and compromises will be determined by the balance of power and the quid pro quo put on the table.”
Beijing's weapon is still loaded
Handelsblatt's China correspondent Martin Benninghoff sees no sign of a lasting detente:
“China's mantra-like threat to cut off the supply of rare earth metals to the US and the West persists. ... So you don't have to be a pessimist to predict that tensions between the world's two largest economies will soon mount again. Both states are manoeuvring themselves into impenetrable bloc formations and mutual demarcation – decoupling instead of consensus. The Chinese leadership in particular has made up its mind. ... The rare-earth metals weapon is still loaded and lying on the Chinese table. Until the next threat.”
Raw materials remain a lever against the West
Economist Matas Laukevičius points out in IQ that the structural dependencies in the rare earths market remain unaltered:
“China currently mines around 70 percent of these metals and processes up to 90 percent of the entire global volume. This dominant position in the supply chain has become a geopolitical instrument. Since China's tightening of its export strategy, there have been growing signs of a shortage of raw materials on global markets. ... The issue is becoming increasingly urgent from both an industrial and a security policy perspective. The growing risks are evident in the US car industry, for example: Ford recently had to halt SUV production temporarily at its Chicago plant due to a shortage of magnets.”
Zero-for-zero tariff deal obsolete
The agreement means that the EU will have to prepare for tariffs on European trade with the US in the future, La Repubblica points out:
“The protocol signed in Washington and Beijing immediately came under scrutiny by European officials negotiating with the White House. Mainly to assess whether the same path is viable in Brussels. This would imply maintaining a form of the current status quo. However, it's clear that the truce between Trump and Xi will have an almost immediate consequence for Europe: the European 'zero-for-zero' proposal, which provides for substantial mutual cancellation of all tariffs, is now obsolete.”