Trump's China gambit belies rocky road ahead on tariff deals

Japan Times

4 hours ago

President Donald Trump has come up short on striking trade deals with most nations with just one month left before his self-imposed tariff deadline, even as he took his first steps in weeks toward engaging with China.
Trump secured a much-desired call with Chinese President Xi Jinping, paving the way for a new round of talks on Monday in London — yet the diplomacy was overshadowed by a blowout public fight between Trump and his billionaire onetime ally, Elon Musk.
Trump's aides insisted Friday that the president was moving on and focused on his economic agenda. Still, question marks remain over the U.S.'s most consequential trade relationships, with few tangible signs of progress toward interim agreements.
India, which the Trump administration has cited as an early deal target, has taken a tougher line in negotiations and challenged Trump's auto tariffs at the World Trade Organization. Japan held another round of talks with the U.S., while also signaling it wants a reprieve from duties on cars and light trucks.
The legal fight over Trump's tariffs hangs over everything. A court ruling striking down the country-by-country duties imposed using emergency authorities left partners with no certainty over what Trump's powers are. The next test could come as soon as next week, when a court could rule on the administration's appeal.
Trump and his team were eager to draw attention to inroads with China as proof his ways are working.
Trump on Friday described talks with Beijing as "very far advanced' and said Xi had agreed to speed shipments of critical rare-earth minerals that were at the center of recent tension. Unlocking those supplies would spell relief for major American automakers.
Chinese Vice Premier He Lifeng will visit the U.K. next week, during which he will conduct trade negotiations with the U.S., the Chinese foreign ministry said in a statement late Saturday.
The mixed results in the talks so far demonstrate the highs and lows of Trump's mercurial approach to trade, in which he and aides have cast him as the ultimate decision-maker on any deals.
Rather than provide a clear-cut victory, Trump's dealings with Xi also show the difficult road ahead with China. The rare-earths dispute revealed how important those supplies, which Beijing dominates, are for the U.S. economy.
"Xi is not letting go of the rare earths. He's got leverage, he's using it,' said Douglas Holtz-Eakin, president of the American Action Forum, a conservative think tank. "They talked, that's the most important thing. I think they're really far apart.'
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The clock is ticking for Trump. His 90-day pause on higher tariffs for the European Union and nearly five dozen countries expires July 9 — barring an extension he could do with the flick of a pen — while China's reprieve extends until August.
If deals aren't reached, Trump plans to restore tariff rates to the levels he first announced in April, or lower numbers that exceed the current 10% baseline, a White House official said, speaking on condition of anonymity.
"We will have deals. It takes time. Usually it takes months and years; in this administration, it's going to take more like days,' White House trade counselor Peter Navarro said Friday on Fox Business. "We're on task and on target.'
The Office of the U.S. Trade Representative (USTR) "looks more like a deli now,' Navarro said, with countries lining up for talks. USTR sent letters this week to trading partners reminding them of the deadline.
It's unclear what all the frantic activity has yielded.
Xi for months was reluctant to get on the phone with Trump and analysts speculated about what concessions the U.S. president offered to his counterpart in exchange for the call.
Trump at least appeared to give some ground on foreign students, saying it would be his "honor' to welcome Chinese scholars even as his administration cracks down on student visas.
German Chancellor Friedrich Merz visited Washington facing demands from his nation's automakers for tariff credits for vehicles they produce in the U.S.. But the subject barely came up during the public portion of his meeting with Trump, who spent a large chunk of time unloading on Musk.
"We'll end up hopefully with a trade deal or we'll do something — you know, we'll do the tariffs,' Trump said Thursday alongside Merz.
Merz, in his U.S. visit, emphasized the integrated trade ties between countries that are at risk — including by personally driving a BMW built in South Carolina. The German leader said Friday at an industry event the nations should agree on an "offset rule' that would provide tariff relief for existing U.S. production.
Trump's U.K. deal — the lone pact so far — was undercut this week when he plowed ahead with levies on steel and aluminum. The U.K. said the pact included an agreement for zero tariffs on British metals, but Trump's latest order kept a 25% charge on them while negotiations continue and doubled the rate for others.
Still, the upcoming Group of Seven summit of leaders from major economies could provide an opportunity for the type of in-person dealmaking Trump craves. Canadian Prime Minister Mark Carney has been discussing terms of a potential interim deal with Trump ahead of the gathering this month near Calgary.
One theme is clear: Negotiations over his so-called reciprocal tariffs have grown intertwined with his separate duties on autos and metals, despite previous U.S. signals that the administration considered them separate.
"He's entirely transactional,' Holtz-Eakin said of Trump. "He will always deal.'
Talks are ongoing with the EU, which has previously proposed an agreement with the U.S. to mutually drop auto tariffs to zero as part of a broader trade framework, which the Trump administration rejected.
The bloc subsequently suggested working toward zero-for-zero tariffs on cars, other industrial goods and some agricultural imports with tariff-rate quotas as a possible interim measure.
Commerce Secretary Howard Lutnick said this week he'd consider some type of "export credit' on autos, the kind of carve-out sought by Germany on vehicle tariffs. And he predicted there would be a U.S.-India deal in the "not too distant future.'
Lutnick signaled, though, Trump's push for so-called reciprocity comes with caveats. The U.S. wouldn't agree with Vietnam to drop all tariffs, because it believes the Southeast Asian nation is a hub for so-called transshipment of Chinese goods.
Talks with South Korea, where Trump spoke with newly elected president Lee Jae-myung, and Japan, which had top trade negotiator Ryosei Akazawa meet with Lutnick, continued this week.
In yet another sign of the Trump team's frenetic approach, Nikkei reported that different — and even competing — positions among Treasury Secretary Scott Bessent, Trade Representative Jamieson Greer and Lutnick had confounded Japanese counterparts.