Can you give us a little bit of background on this trade truce?

Yeah, this happened last year where President Trump threatened to raise tariffs on China to over 100 percent.

Then he came down a bit.

And then the Chinese who had previously passed a law that allowed them to put export controls on.

on critical minerals and permanent magnets, said that this was at stake, that the U.S. needed to lower its tariffs if they wanted to have the continual flow of these critical minerals that, of course, are essential to many U.S. industries.

In Busan, South Korea, last October, They reached an agreement where the tariffs on the broad-based tariffs across U.S. imports from China would stay no more than about 20 percent, not including the tariffs that we had under the first trade war.

It's a complicated area.

Big picture, how would you describe the current economic relationship between the U.S. and China right now?

Can you give us a little bit of background on this trade truce?

Yeah, this happened last year where President Trump threatened to raise tariffs on China to over 100 percent.

Then he came down a bit.

And then the Chinese, who had previously passed a law that allowed them to put export controls on critical minerals, permanent magnets, said that this was at stake, that the U.S. needed to lower its tariffs if they wanted to have the continual flow of these critical minerals that, of course, are essential to many U.S. industries.

In Busan, South Korea, last October, They reached an agreement where the tariffs on the broad-based tariffs across U.S. imports from China would stay no more than about 20 percent, not including the tariffs that we had under the first trade war.

It's a complicated area.

And in exchange, China would guarantee the flow of these minerals to the U.S., Since that time, we have seen critical minerals flowing to the United States from China, but with a lag and not in the quantity that American industries have requested.

Big picture, how would you describe the current economic relationship between the U.S. and China right now?

What other trade policies are there that could do what the tariffs apparently are not doing?

Well, I would say that the administration is quite quietly rolling out a bunch of different initiatives that would allow them to enforce the movement away from China.

An important one is the agreements on reciprocal trade, which contain a variety of legal mechanisms to force other countries to align with U.S. trade preferences.

And these include agreements to align with the U.S. on our trade policies, such as, you know, we levy countervailing duties or anti-dumping duties or use Section 301 on our export controls.

For some countries, there's even investment screening requirements.

The problem with these is that they have not been ratified by any other country, I think, except one.

And in the U.S., of course, it's never going to go before Congress.

How can these agreements that aren't ratified, how can they force alignment with U.S. policies?

What are they?

Well, Annmarie just talked about chips.

Clearly, the Chinese have, um, balked at the US export controls.

They have since moved on.

They are now devoted to their own development of their own domestic chips.

Uh, but if we look back at the last year, we can see that the main irritants or the most proximate errors were President Trump's acceleration of the tariffs that had been placed on China in its, his first term and then the Chinese invoking new export controls on critical minerals.

Uh, a potentially very disruptive move for US industry, and the US move to re-arm following the war in Iran.

What's your take on this?

Mary Lovely in Washington, what was your kind of top-line takeaway from the last couple of days?

Well, I certainly agree with, um, Brad and his assessment.

I, I do note that, um, President Xi likes to stress the importance of the US-China bilateral relationship, and President Trump, uh, seemed to, to, uh, acknowledge that.

She also really likes to drill down on the fact that trade between the two countries is win-win, and that has been something that the US has, uh, really questioned over the last, uh, ten years.

Uh, President Trump in particular has said that they take advantage of us and et cetera, et cetera.

Uh, yet today we heard him talk about how the two sides can work together for the betterment of children in both countries.

And lastly, we had, uh, Xi talking about how we're partners instead of rivals, and President Trump certainly did not contradict that.

So Mary, where, uh, Andy was starting with that is this nickname that the Chinese public have got for President Trump, Nation Builder, kind of giving China a, a new confidence, he was saying there.

Do you think China is welling- willing and ready to make those changes?

I think China is willing to make some changes, not all that the US wants.

Uh, China right now is, of course, uh, struggling a little bit to revive its mar- its, uh, local demand.

Um, it does not want to be as dependent on net exports.

Net exports from China grew by 36% in the year to date.

Uh, that means that a lot of Chinese growth is dependent on the rest of the world accepting, uh, their exports.

And for many countries, that means accepting that they'll be permanently in a trade deficit position.

Mary, in your mind at the moment, in the history that you've been following this, what makes this unsustainable? What would stop them from doing what they've been doing for such a long time?

What can they do now? Is there any way that they can still maintain access to the Chinese market, or do they potentially shift manufacturing out of the US?

Well, many of them will, some of them will shift manufacturing out of the US.

What we're seeing is sort of a bifurcation, or a splitting.

So, you'll see companies investing in the US for the US, and they'll be able to operate behind this tariff wall with high prices.

So, they'll be able to create things that might, in the past, not have been really-... economic to produce here because they have these high prices.

But for serving the rest of the world, they'll go outside the US.

They won't have to pay higher taxes on their inputs, the things that they import to, to use in production, and they won't face retaliatory tariffs from other trade partners.

What are they bracing for exactly?