Art of the deal? Trump signals walkback on China tariffs
US President Donald Trump has signalled that the US would scale back its prohibitively high tariffs on China in hopes of securing a deal.
President Trump has indicated the US would scale back its 145 per cent tariffs on Chinese imports after US officials labelled the trade war unsustainable.
“It’ll come down substantially, but it won’t be zero. It used to be zero, we were just destroyed. China was taking us for a ride,” he told reporters in the Oval Office on Wednesday (AEST).
“It’s at 145 per cent. It will not be anywhere near that number … If we don’t make a deal, we’ll just set it. We’ll just set the number.”
The backdown came after China imposed 125 per cent tariffs on US goods and moved to restrict critical minerals exports.
Rare earth elements (REE) are crucial for US national security, being a key element of many of their defence technologies.
China accounted for 61 per cent of REE production and 92 per cent of their processing in 2023, the International Energy Agency estimated, giving it a near monopoly on the critical minerals that the US relies upon for its national security.
Despite recent investments into domestic critical mineral processing capabilities, the US is not currently well-placed to reduce its dependence on Chinese minerals.
“Even with recent investments, the United States is a long way off from meeting the [Department of Defence’s] goal for a mine-to-magnet REE supply chain independent of China, and it is even further from rivaling foreign adversaries in this strategic industry,” the Center for Strategic and International Studies (CSIS) said.
“Developing mining and processing capabilities requires a long-term effort, meaning the United States will be on the back foot for the foreseeable future.”
Outside of China, Australia is one of the few countries well-placed to establish capabilities in mining and refining critical minerals. Australia’s 2023–30 Critical Minerals Strategy has sought to establish sovereign capability in critical minerals processing.
However, CSIS noted that Australia is expected to remain reliant on China for REE refining until at least 2026.
Victor Gao from the Centre for China and Globalisation in Beijing told US Channel 4 News that China was unfazed about the prospect of losing the US market, which comprised roughly 13 per cent of its goods exports in 2023, data from the Observatory of Economic Complexity showed.
“We don’t care. China has been here for 5,000 years. Most of the time, there was no United States and we survived. And if the United States wants to bully China, we will deal with the situation without the United States,” Gao said.
“I don’t think there will be China-US dialogue unless the United States changes its attitude towards China."
China’s lead over the US in international trade has only widened after the US-China trade war of 2018–19, Lowy Institute analysis of IMF data found.
“About 70 per cent of the world, or 145 economies, now trade more with China than with America,” the Lowy Institute wrote, based on 2023 trade data.
Donald Trump’s comments to reporters on Wednesday indicated that he had pivoted to a softer rhetoric towards China in the wake of escalating trade tensions between the two economic superpowers.
“I’m not going to say, ‘Oh I’m going to play hardball with China’,” Trump said.
“We’re going to be very nice, they’re going to be very nice.”
White House officials warned that negotiating a trade agreement with China could be a difficult process for the US.
“I do say China is going to be a slog in terms of the negotiations,” US Treasury Secretary Scott Bessent said, according to a transcript obtained by The Associated Press.
“Neither side thinks the status quo is sustainable.”
