Two biggest economies meet to negotiate

Australia Broadcast Center

2 days ago

Samantha Donovan: The world's two biggest economies, the US and China, are again holding talks in an attempt to end the bitter trade war that threatens to derail the global economy. The American president, Donald Trump, launched heavy tariffs on Chinese imports after returning to the White House earlier this year. And China, of course, responded with its own tariffs on US imports. Our business correspondent David Taylor has this report on how the talks are going.
David Taylor: Officials from China and the US have been sitting at the same table, figuring out how to co-exist in a highly competitive global economy. FNArena financial commentator Danielle Ecuyer.
Danielle Ecuyer: Well, that's really interesting because we have some rather big trade talks going on at the moment in London.
David Taylor: Talks at Lancaster House, a UK government mansion, were held yesterday and are set to resume Tuesday morning local time. After agreeing a 90-day pause on the heaviest of their tariffs, Washington and Beijing are trying to strike a deal for beyond that time.
Danielle Ecuyer: Both of those countries have a lot to lose from these tariffs, whether it's America losing access to the rare earths, which they need for the defence industry, for the tech industry, or whether it's China, which is really encountering a huge collapse in their exports, and also the fact that they're experiencing quite heavy deflation, which is also a negative. So I think it's probably mutually beneficial that these trade talks come to at least some form of resolution around some of these major issues.
David Taylor: Since the talks in Geneva, the US has accused China of moving too slowly on its commitments, particularly around rare earth shipments. Rare earths have become indispensable in the manufacture of high-tech products, including smartphones, wind turbines, electric vehicles, flat screens, lasers, as well as missiles, fighter planes and satellites.
Justin Wolfers: A critically important issue for the United States is access particularly to rare earth minerals.
David Taylor: University of Michigan professor Justin Wolfers is watching the talks carefully.
Justin Wolfers: Trump says the Chinese have slow-walked that access. I don't have dirt under my fingernail, so I couldn't tell you one way or the other. It seems utterly plausible in the context of the history of that relationship that they would have done that. The point is, outside of the four corners of the agreement, each feels aggrieved with the other when they just had a meeting to sort out their differences.
David Taylor: Just on that, though, the US Commerce Secretary Howard Lutnick described the talks between China and the United States in Britain early Australian time today as, quote, "fruitful". What do we take from that? Does that matter? Does that mean anything?
Justin Wolfers: Here's how you figure this out. If nothing happened, he would have said they were fruitful, and if a lot happened, he would have said they were fruitful. So therefore, the fact that he said they were fruitful tells you nothing.
David Taylor: US President Donald Trump put out a positive spin on the talks, saying that they were going well, and he was, quote, only getting good reports from his team in London. We're doing well with China. China's not easy, Trump said, offering no details on the substance of the discussions. But as Justin Wolfers points out, so far there's been little to no progress at all in terms of trade negotiations between the US and its major trading partners around the world, since he unleashed heavy tariffs on so-called Liberation Day.
Justin Wolfers: I mean, they're at zero right now. One, if you're a very, very generous grader and include a non-binding agreement with the Brits that the Americans may have already breached. So they're still saying we're here to make deals. It looks very likely that the 90th day will come, and they'll have between fewer than a dozen deals and quite likely zero.
David Taylor: The Australian dollar continues to hold its own amid the trade dramas, currently trading around 65 US cents.
Samantha Donovan: David Taylor reporting.