Trump Got an ‘Amazing’ Meeting. China Got Much-Needed Time

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1:02Bloomberg Audio Studios. Podcasts. Radio. News. High stakes negotiations in Busan, South Korea, between Presidents Trump and Xi Jinping. This was a chance for both sides to stabilize relations after some rocky months. On Thursday, Presidents Donald Trump and Xi Jinping of China reached an agreement, a one-year truce in their trade war. I thought it was an amazing meeting. He's a great leader, a leader of a very powerful, very strong country, China. Xi, through an interpreter, said he and Trump didn't always see eye to eye, but they had found a way forward. You and I, at the helm of China-U.S. relations, should stay the right course and ensure the steady sailing forward of the giant ship of China-U.S.

1:52relations. The agreement capped six contentious months, starting when Trump announced his global tariffs and threatened retaliatory tariffs as high as 145%. The highly anticipated meeting between Trump and Xi in South Korea started with a long and awkward handshake.

2:15There seemed to be some chemistry between the two men. They were shaking hands at the doorway. Trump even went in and whispered something to Xi Jinping. Who knows what he said? John Liu is Bloomberg's executive editor for Greater China. He's based in Beijing. He says the agreement, which brought China's tariffs back to where they were roughly when Trump rolled them out earlier this year, buys China some breathing room. While I think China is happy that there can be a trade truce for maybe the next 12 months, I think the concern that ultimately the United States is trying to put this strategy in place that would restrain China's rise is going to continue to be at the forefront of Xi Jinping and the Chinese leadership's minds.

3:01Brendan Murray is Bloomberg's global trade editor. And he says now that the meeting is over, it will be fascinating to see how news of the agreement is received in Beijing and D.C. I do think that there will be some people in Washington who will look at this as China getting the better of Trump, given the breakdown of the concessions that each side gave up. So now we'll hear the debate about the actual substance if what we're seeing is a truce for the next 12 months.

3:31I'm David Gurra, and this is The Big Take from Bloomberg News. Today on the show, parsing the details of the new U.S.-China trade agreement and why both countries are moving forward without a permanent deal.

3:47Thursday's agreement marks a temporary truce in a U.S.-China trade war that President Trump set off in April. I asked Bloomberg's Brendan Murray and John Liu to dig into what each country won and lost in the agreement. Here's Brendan. So here's the scorecard that I've been keeping. The U.S. concessions. The U.S. is lowering fentanyl tariffs from 20 % to 10%. The U.S. is suspending this 50 % expansion of its U.S. entity list, the ownership list that so irritated the Chinese a few weeks ago. The U.S. is backing away from the 100 % tariff threat that President Trump put out there a few weeks ago.

4:27China's reciprocal tariff rate stays at 10 % for another year. and they're suspending ship fees. Both countries are, but that was much more damaging to China than it was to the U.S. So those are the U.S. concessions. What China gave up, its rare earth controls, the most extreme of which it announced a few weeks ago, it's suspending those for a year. It says it's going to resume buying American soybeans and potentially there's some energy deals to be done there. It's going to crack down on the export of the chemicals used to make fentanyl. And Trump said that China agreed to some vague promises of investments and then agreed to work on a solution for TikTok.

5:06So I think any way you add those up, China comes up a little bit, you know, giving up less than what the U.S. gave up. And I believe that the hawks in Washington would support that view. John, as you hear Brendan describe that scorecard, as he put it, there are some things that these two leaders didn't talk about. They didn't get into great detail about these NVIDIA Blackwell chips. Sounds like they didn't talk about Taiwan, if you believe the president of the United States. How surprising is that? What wasn't talked about in Busan? On the question of Taiwan, from what I've heard from President Trump, he seems to be very aware of how sensitive a topic that is and how potentially explosive.

5:43On chips, you know, I think China wants the NVIDIA Blackwell chips. If they could get their hands on the most advanced technology that's out there, they definitely would do that. But again, I think it's some consideration of how likely it would have been for them to get that. And if putting too much at stake, putting too much emphasis on that would have meant giving up on something else. Ultimately, Beijing is going to walk away feeling like it got a pretty good deal. And going forward, it's going to try to hold the United States to what has been agreed to. On that point, I mean, this is not a deal that's going to continue in perpetuity.

6:19And Brendan, I think I've seen this described as subscription diplomacy. You can kind of analogize this to your Netflix subscription. You had this three-month pause on tariffs, and now you have a year-long pause on tariffs. It just keeps getting extended, and there's no kind of permanent resolution to all of this. What does that mean for U.S.-China relations long-term? So the phase one trade deal that President Trump signed in his first term, what they had achieved was a 90-page multi-chapter agreement that President Trump said would transform the relationship between the U.S. and China. So fast forward to what we've seen come out of the latest Xi Trump deal.

6:56We have a couple hundred word social media posts from President Trump and basically a relationship that is no longer based on something that's in writing that will be based on a series of talks going forward. And John, I'd be curious to hear your reaction to this, but that really plays into China's strategy of let's just kind of string them along and things can escalate and deescalate. But we'll have this series of discussions rather than something in writing that we'll abide by. And the two sides will kind of try to maintain some sort of stability going forward. And given the volatility of the temperament of President Trump, I'm not really sure that plays into his strengths.

7:41I think the fundamental relationship is one of rivalry. And I don't think any deal that is struck today or in a year is going to change that. And what it means is, yes, there's a truce, but at the same time, both countries are using that time to try and build up an arsenal that they can bring to bear in the future. So I think we are inherently going to have lots of volatility. We're going to have deals that come together only to fall apart because fundamentally the two countries are at odds, are competing, and it's not a relationship that lends itself to stability. After the break, with many negotiations still in progress, what does this U.S.-China deal mean for other countries still stuck in the trade war?

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9:33With several issues unsettled between the United States and China, I spoke with Bloomberg's Brendan Murray and John Liu about what's next. So it seems like after this meeting, lower level officials, advisors are going to hammer out some of the details here. But there was such a buildup to these two leaders meeting face to face. And I wonder if this is what we're going to see going forward here. The big decisions are going to be made when these two men get together. That's just going to be kind of the contour of these conversations, the way that these countries deal with each other going forward, leader to leader.

10:00I think that's the way it will be. We had this announcement by President Trump saying that he was going to visit China in April and that President Xi would then do a reciprocal visit to the U.S. after that. We also know that China is hosting APEC next year and the United States is hosting the G20 in Miami at the end of the year. And so there's going to be a lot of opportunity for these two men to get together. And I think that just means that a lot of the problems that pop up between these two countries will ultimately have to be decided and resolved or sort of tempered by these two men. In looking at the state of trade negotiations with the U.S.

10:41globally, Brendan has described them as fitting into different buckets. There's the first bucket, appeasement. You've got basically countries that are just having to accept the tariffs. Then there's the second bucket, the kicking and screaming bucket, per se. Canada is the perfect example. They've been back and forth with the threats between the U.S. and Canada for months now. Then the third bucket, the countries putting up a fight. And China, I think, really has shown, compared to at least Trump's first term dealings with Xi Jinping, that it can play hardball the way Trump likes to play hardball.

11:19The ability to use the threat of rare earths and China's dominance with them really changed the game this year. The U.S. has a technology advantage, and they will use that as leverage over China. But China has this rare earths advantage that really hasn't come to the fore the way it has until now. So I think that that's really where the game has changed. China has said, you want to play rough? We can play rough too. And everyone else realized that, yeah, they can do some damage if they want, or threaten it at least, to get what they want.

11:56China's advantage on rare earths is not going away soon. Even with the U.S. building up its capabilities and partnerships, it'll be many years before it could conceivably replace China as a supplier. Brendan, give us a bit of context here as you look at the long sweep of this trade war. Is global trade now in a better place than it was yesterday or a week ago last year? So how has this meeting kind of changed the way that this war is unfolding? Yeah, I mean, global trade has been pretty resilient through all of this. I mean, you could go back to the first US-China tariff conflicts in Trump's first term through COVID, and then the return of Trump with the reciprocal tariffs kind of shocking every country.

12:37And trade has held up pretty well. The World Trade Organization will tell you that 75 % or so of trade globally still runs by rules, by low tariffs, but that number is going down the more the U.S. puts tariffs up. And we'll have to see how long that that can hold out. And remember, President Trump went around, he calls them deals, but he's putting higher tariffs on these countries in Asia, and they won't be liking it. So how long will these countries be able to withstand the headwinds of these higher tariffs once their industries start to suffer? Then here comes the political pressure. So I think the big question is, You know, we've seen over the past half century or so, free trade being used to ensure peace, the peace dividend.

13:23If we trade with one another, we won't go to war with one another. Now, President Trump is using the threat of tariffs to tell countries to not be in disputes. And so tariffs are being really turned into something completely different than they have been for the past 50 years. And I think we don't really know how it's going to end up. But the economic consequences are going to be slow. And perhaps they'll deliver jobs in the U.S. and investments. And, you know, maybe that's where we'll end up. But I think there's going to be a lot of disruption and uncertainty in the meantime. And I guess I should note here too, Brandon, that even though this deal did knock the U.S.

14:00tariffs down by 10%, the overall China tariff is much higher than it was a year ago, about 30 % on average, according to Bloomberg Industries. with many products facing tariffs as high as 47%. Yeah, China is still something in the 30 % range, 30 to 40%. And it will be more competitive than it otherwise would have been with its manufacturing rivals across Southeast Asia, which came in somewhere around the 20 % mark. But China has found markets for goods that are no longer being bought by Americans and has maintained that. The question is, is China going to export problems to other countries that will have a backlash the way the U.S.

14:43has reacted? And that gets me to my last question to you, John. We see a country that is looking many years down the road. I think on the eve of this meeting, China announced its next five-year plan will significantly boost the share of Chinese consumerism, domestic consumption. That timing seems intentional to me. What is the strategy there on the Chinese part? I think China sees its dependence on trade as a weakness. I think China has come away from the last eight to 10 years believing that any dependency that can be weaponized will be weaponized. And so Chinese trade has been booming, as Brendan was saying.

15:21China's selling stuff to Europe, to Latin America, to Africa, around the world. And its trade surplus, I think, is on pace for like 1.5 trillion US dollars this year. I think there's a general recognition in China that that is not a sustainable path forward, that that is just going to peeve off all of their trading partners. And so they are putting a lot of effort in trying to develop a domestic consumer economy. The problem is, how do you do that if they can do that? And I think there are a lot of reasons to think it's going to be a real challenge. The other issue there is that Trump's political clock is ticking a lot faster than China's clock on this.

16:01And China has the advantage of time, and they can drag this along. President Trump needs to deliver something economically before the midterm elections start heating up in nine months or so. So I think that time is not on President Trump's side here. And China, you know, plays a much longer game than the U.S. does.

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