Trump-Xi summit a strategic turning point in US-China rivalry

Late last month, Chinese President Xi Jinping and US President Donald Trump reached a trade truce in Busan, South Korea, on the sidelines of the Asia-Pacific Economic Cooperation (Apec) summit. Beyond the pre-existing tariffs imposed by the first Trump administration and reinforced by the Biden administration, the current Trump administration will now levy an additional 20 per cent or so in tariffs on China, resulting in an estimated 47 per cent average tariff rate on China.

As part of the truce, the United States reduced the tariff imposed in February over fentanyl flows into the country from 20 per cent to 10 per cent. On a net basis, US tariffs on Chinese products have been rolled back to around the level they were before Trump announced his “Liberation Day” tariffs on April 2.

Despite the leverage it possesses, China has chosen to accept tariffs of nearly 50 per cent from the US. It still cannot buy the most advanced graphics processing unit chips for artificial intelligence from the US. A consortium of American investors are likely to take a controlling stake in TikTok’s operations in the US, and as part of the Busan agreement, the White House says China will resume buying soybeans from the US.