US-China Tariff Negotiations Show Positive Signs…"Rare Earth Dispute to be Resolved"

Geneva Agreement Framework Reached

The United States and China announced on the 10th (local time) that they had "agreed on a framework to implement the Geneva Agreement." This marks a breakthrough in efforts to ease the tariff war.

Howard Lutnick, US Secretary of Commerce, told reporters in London, United Kingdom, after two days of talks with the Chinese side, "China's controls on core minerals and rare earth exports and the recent US export restrictions against China will be lifted." Li Chenggang, China's Vice Minister of Commerce and International Trade Representative, also told the press, "The two countries held professional, rational, in-depth, and candid discussions," adding, "We hope this progress will help enhance mutual trust and inject positive energy into the development of the world economy."

Last month in Geneva, Switzerland, the US and China agreed to reduce each other's tariffs by 115 percentage points for 90 days and for China to lift its restrictions on rare earth exports. However, the US expressed dissatisfaction, saying that China had not eased its controls on rare earths, while China raised issues such as US restrictions on semiconductor exports and the cancellation of visas for Chinese students. As a result, US President Donald Trump had a phone call with Chinese President Xi Jinping and agreed to hold high-level talks.

The key to this deal is that if China increases its rare earth exports to the US, the US will relax the technology export controls imposed on China after the Geneva negotiations. In the market, there is speculation that the US agreed to loosen restrictions on semiconductor exports in exchange for securing rare earths. Decatur Roberts, senior fellow at the Atlantic Council, told Bloomberg News, "A US decision to ease technology controls will be seen as a major victory for China."

Washington = Lee Sang-eun, Correspondent, selee@hankyung.com