Lutnick and Li boarded flights home to Washington and Beijing saying the framework would first need to be ticked off by the two leaders – President Donald Trump and Chinese President Xi Jinping– before negotiations can continue further; a detail that, while probably not a hurdle, wasn’t a feature of the last breakthrough which was secured then and there in Switzerland.
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It’s also an outcome that hinges on Lutnick’s assertion that the new framework would resolve China’s restrictions on rare earths in exchange for the US dropping its retaliatory curbs. Li didn’t delve into these issues, telling reporters only that the discussions were “professional, rational, in-depth and candid”.
As US-based economist Justin Wolfers put it: “The US and Chinese trade negotiators have negotiated a handshake agreement to seek sign-off to agree that a previously agreed agreement is still their agreed-upon agreement”.
“Notice that not only are we not getting a better deal, we’re not even getting back to where we were at the start of the administration,” he wrote on X.
In the meantime, the clock is ticking with just 60 days left for the two sides to broker a wide-ranging deal on the key issues that underpinned Trump’s decision to kick off a trade war in the first place. Grievance over China’s manufacturing capacity and surging exports, and its role in the fentanyl trade.
Rare-earth upper hand
Beijing, though eager for a deal to rescue its economy from a deflationary crisis, clearly believes it holds the upper hand in the negotiations. China controls 70 per cent of the mining of rare earths and 90 per cent of the processing used to make the magnets that are essential for a range of industries, particularly electric vehicles, wind turbines and defence equipment.
Beijing’s decision to choke supply left Washington scrambling. American auto-makers began warning they would have to close production lines and consider moving some production to China if they could not get access to rare-earth magnets soon – the antithesis of what Trump set out to achieve.
Employees at Foxconn, a major Chinese contract manufacturer for Apple products.Credit: Getty Images
“The point is we want the rare earth, the magnets that are crucial for cellphones and everything else to flow just as they did before the beginning of April,” Kevin Hassett, a senior White House economic adviser, said this week.
For months, Xi had signalled little urgency to secure a breakthrough. Instead, he weaponised Trump’s appeals for a phone call between the two men, ghosting him in a power play of unrequited approaches that sent the US president into a tailspin.
From the peak of “we will solve many problems together” in January, to the expectation of talks with Xi “over the next 24 hours” in February, and the “ball is in China’s court” in April, Trump’s rollercoaster of confidence careened through the valley of plaintive hope and arrived at the abyss of despondency last week, a day before the two men finally spoke on the phone.
“I like President XI of China, always have, and always will,” Trump wrote on Truth Social before the phone call. “But he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!”
It’s a line even the most flattering propagandists at the helm of China’s state media would struggle to beat.
