By coinnews 
00:00 Speaker A
An event in the Middle East. President Trump said India has offered to remove all tariffs on US goods. This comes as US and Chinese officials met in South Korea. It’s the second known round of talks since the two nations agreed to a 90-day pause on reciprocal tariffs. So what does this mean for the future of trade between the two nations? Joining us now, Leland Miller, China Beige Book co-founder and CEO. Leland, great to have you here. Uh, I could use some help getting clarity on whether the negotiations are going to look like any potential deal. How much confidence do you have that this 90-day truce could look more permanent?
01:21 Leland Miller
It all has to do with what a deal means. If it’s simply a deal that, you know, freezes the the situation at at these levels, then definitely, sure, the Chinese will will be glad to take it. If it’s building to a phase two deal, then what does that look like? Is it just more commodities buying, and maybe some things sprinkled on top, fetanyl cooperation, give on TikTok, the Chinese would love to take advantage of an offer like that, because it’s going to just drive more bilateral flows in China’s direction and relieve the pressure. If if there’s more of an ask for structural structural changes, those are things that the Chinese are not going to grant in a trade negotiation. So all of it has to do with what the administration’s demands are for a deal. If they want any deal, they can get a deal, but if they want a good deal, that’s a different, that’s a different story.
02:43 Speaker A
Who who has the upper hand right now, Leland?
02:57 Leland Miller
Well, that’s a little bit tricky. So, in a strictly bilateral face off, the United States would have enormous advantages. Uh, but on the other hand, you know, this isn’t just a bilateral face off. There’s a lot of other tariff negotiations going on in the background. And one of the things that I think is being ignored right now is that with China’s tariffs being brought down so significantly, but the threat of Southeast Asian tariffs and others staying elevated, you have the potential that if they don’t have deals done in the near future, then all the production that had been moving out of China to diversify supply chains for national security purposes and other reasons, all the production that’s gone outside of China could flow right back in. And so the administration, while trying to play tough on Southeast Asia, could end up empowering China and blowing out the bilateral trade deficit by the end of the year. So a lot of forces at play here.
04:13 Speaker A
My guest host, Tim has a question for you as well.
04:18 Tim
Leland, I guess you know, you look at this 90-day pause that we’ve seen. I think obviously investors have gotten very excited about that. Longer term, what does this look like? Is it 30%, is it 40%? What would the US, uh, you know, and China be happy with where it’s a win-win situation?
04:54 Leland Miller
Well, happy’s a happy’s a relative term, but I think that the contours of this are quite wide. When you have tariffs that are above 60-70%, then it’s prohibitive. You’re effectively decoupling the economies. There’s a lot of economic hits, which means there’s political pain. You know, if you want to get much lower, then of course you’re looking around the world, and you’re saying, wait a second, why are we giving China, which is supposed to be the big bad guy, a better trade deal than some of these other countries? So, the there’s a there’s a rather wide window depending on what the administration wants, uh, in terms of how this settles. But again, it all depends on what else do they want. If this were just about tariffs, there’s a level we could probably we could predict. But if it’s about other aspects of the relationship, if the phase two deal is going to be about more purchases or about, you know, sectoral decoupling, it’s about other things, then tariffs aren’t the whole story.
06:12 Speaker A
Well, let’s talk about exactly that because there are these non-tariff barriers and things like chip export controls are coming up. Beijing officials calling the US bullying on AI chips, as legislation is put forward to continue to curb China’s access to the most powerful AI chips. How do you see that impacting a company like Huawei going forward, a Chinese-based company amid the engulfing of chip names in the trade war?
07:01 Leland Miller
Well, the mistake on Huawei is not that we didn’t identify the problem a number of years ago and crack down on it. It’s that there are loopholes developed. Huawei found ways of getting these chips, both directly and especially indirectly, that it needed in order to build back up its empire. And US administrations have sat idly by and let them do this. And so now we have Huawei returning as a powerhouse. The Chinese tech sector has got all the chips it needs with multi-year stockpiles. It shows a lack of seriousness on export controls. A lot of talk, not that much action when it comes down to it. So if folks want to get serious about this, they have to realize export controls can’t be Swiss cheese. They need to actually cut the problem off that they want to cut off.
08:12 Tim
Leland, you’re looking at this from an investment lens here. Uh, let’s say, you know, we we do get to a 30 or 40% level. What type of impact on growth does this have for the US? What type of impact does growth does it have over in China?
08:43 Leland Miller
It depends on what tariffs are on the rest of the world. If if the purpose of tariffs on China is to diversify supply chains out of China because you don’t want Beijing to have a stranglehold or choke points on your supply chain, then you shift the production to other places. Plenty of countries are ready to take it. You’ve got India, Southeast Asia, you’ve got Mexico, plenty of other ones. If you’ve got elevated tariffs elsewhere, then it sort of changes the nature of the game. So you have to figure out what your priorities are when you’re doing this. There’s a short-term hit from tariffs at times, but that doesn’t mean there needs to be a long-term hit. There just needs to be a thoughtful sequencing of these tariffs.
09:41 Speaker A
Leland, thank you so much. Really appreciate you joining us this morning.
09:46 Leland Miller
Pleasure.