By coinnews 
00:00 Donald Trump
The biggest thing that came out of that meeting is they’ve agreed. Now, we have to get it papered but they’ve agreed to open up China. It’s going to be great for everybody.
00:15 Speaker A
President Trump Monday morning praising a breakthrough trade deal with China to temporarily reduce tariffs. Per the agreement US tariffs on Chinese imports will fall to 30%, while Chinese tariffs on US goods will drop to 10% for the next 90 days. Joining me now Bonnie Glaser managing director of German Marshall Funds Indo-Pacific program Bonnie, great to speak with you. Who won this round of negotiations? The US or China?
00:46 Bonnie Glaser
Well I think that negotiations are just beginning. They are not over, there is no deal yet. The important outcome of the talks in Switzerland is the establishment of a what they’re calling a consultation mechanism to talk about trade and economic issues. And I think that this opens the door to serious uh talks and negotiations between the two sides. What we see in terms of the temporary um tariff um reduction uh is similar, of course, to what the United States has done with other trading partners. Uh except that whereas for other trading partners they’ve dropped it to 10%. For China, they’ve dropped it to 30%. And those additional ten, twenty percent tariffs are related to the fentanyl trade. That’s why they were imposed and the Trump administration has attached very high priority to stopping the flow of chemical precursors that are used to make fentanyl from going to fentanyl and ending a go go sorry going to Mexico and ending up as fentanyl in the United States.
02:43 Speaker A
But Bonnie, which nation benefits more from the deal as it stands today amidst the negotiations?
03:00 Bonnie Glaser
Well, it’s been reported that the United States has gotten a a reprieve on the uh restrictions of critical minerals and rare earths to the United States. I think that’s a big win for the United States if that holds, because the United States is extremely dependent um on on China for uh those uh minerals. Uh but then I think it’s really a win for the peoples of both countries. I I I realize that’s that’s not a direct answer to your question, but just restarting trade. We’ve seen over the last couple of weeks trade is just ground to a halt. Shipping containers aren’t leaving China and we are about to see real shortages in the United States because of uh goods not arriving from China. So it really is a win for the people of both sides if trade resumes and taking them down to 30% will will it will still increase costs but the trade will resume.
04:49 Speaker A
And Bonnie, my guest host Kevin has a question for you.
04:55 Kevin
Hey Bonnie, I just wanted to get your sense, you know, outside of the past couple of days and the discussions that the US and China had in Switzerland, um you know, what’s your sense of, you know, China’s overall kind of strategic footprint here and how things have changed since the since the, you know, trade war 1.0 if you want to think about it that way. I mean clearly, the direct relationship in terms of US trade with China and you know, imports directly from China, that has come down, um especially as a percentage of overall imports. We know a lot of that has been rerouted through other countries whether it’s Vietnam, or Cambodia or Thailand, but in the strengthening of relationships between China and those countries or China and South America. How do you think that China has a different set of cards this time, maybe more of an upper hand?
06:00 Bonnie Glaser
Well, China’s relationship has definitely strengthened with many of the developing countries in Southeast Asia, Latin America, um Africa and there is transshipment of Chinese goods going through Vietnam and and Malaysia in particular. Uh the Trump administration is trying to shut down that transshipment and uh that issue has already been on the table, as we know with uh with Vietnam. So, China has been able to diversify some of its exports from the United States and and to the United States and some of its imports. For for example, the Chinese are now purchasing soybeans from Brazil um instead of from the United States. But at the end of the day the United States is a hugely important market for China. And the Chinese can maybe lessen the damage but they can’t eliminate the suffering that would occur if they’re really blocked from access to the US market. And I think that that is not going to happen since both sides have said they don’t want decoupling. So, now we get down to the you know, the details of a deal and the devil is always in the details.
07:54 Kevin
Yeah, well on the importance of of that relationship, you know, taking the other side of things, not just on the goods deficit side, but on looking at services, which I I argue often gets overlooked in all of this. I mean, we have a massive surplus, uh you know, services surplus with China. So do you think that, you know, as these negotiations grind on, as we still have relatively high tariff rates on on imports from China, um what do you think the risk is if if any if at all um to the services side of things in terms of Chinese demand for for US services?
08:45 Bonnie Glaser
Well uh, President Trump has talked about the market opening in China and of course, China has opened its uh financial services uh sector to some extent uh to the United States. So I don’t think that the Chinese are going to be looking to take punitive actions against the services uh sector. Um I think, in fact, the Chinese would like to eliminate, to the extent possible, um any of the restrictions um on trade that don’t benefit them, right? I mean, that’s they they they want to make sure that they that they preserve what is beneficial to China. And, of course, even though you pay attention to services and we should all pay attention to the services trade. The Trump administration talks very little about it because that’s where US advantages are. We do have a surplus with China but the focus is on China’s surplus with the United States and our negotiator Scott Besson has said it’s five to one, the goods that we sell uh that we buy from China compared to what they buy from the United States.
10:19 Speaker A
So Bonnie, I’m looking for a one-word answer here. US or China, which gave more in this round of negotiations?
10:29 Bonnie Glaser
Sorry, it’s just not over yet so I don’t think we can say who who won and who gave more. It’s a process.
10:38 Speaker A
All right. Bonnie, thank you so much, appreciate your time this morning. We’re going to have all your markets action ahead. You’re watching Catalysts.