Trump Announces Deal with China is Done

Universal Cargo’s blog post on Tuesday was about what’s happening with America’s trade deal negotiations with China and India. Apparently, that post came one day too early. Yesterday morning, President Trump took to social media to announce “our trade deal with China is done…”

Here’s his full announcement on Truth Social:

OUR DEAL WITH CHINA IS DONE, SUBJECT TO FINAL APPROVAL WITH PRESIDENT XI AND ME. FULL MAGNETS, AND ANY NECESSARY RARE EARTHS, WILL BE SUPPLIED, UP FRONT, BY CHINA. LIKEWISE, WE WILL PROVIDE TO CHINA WHAT WAS AGREED TO, INCLUDING CHINESE STUDENTS USING OUR COLLEGES AND UNIVERSITIES (WHICH HAS ALWAYS BEEN GOOD WITH ME!). WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%. RELATIONSHIP IS EXCELLENT! THANK YOU FOR YOUR ATTENTION TO THIS MATTER!

Thank you for using all caps, Mr. President. It reminds me of my dearly departed grandmother trying to send one of those weird, new electronic-mail thing-a-ma-whose-a-whats-its and getting the caps lock stuck. However, the context makes me sure the president’s caps are for emphasis, and maybe excitement, rather than him yelling at Democrats or something. I know my grandma would never have used caps to yell at anyone, even political opponents, if she’d had any.

But I digress, as we won’t know a ton about this deal until it is made official with signatures on the dotted line.

The biggest takeaway for shippers, besides there being a deal awaiting only presidential approvals from Donald J. Trump and Xi Jinping, is the 55% tariffs President Trump says the U.S. is getting on goods from China.

55% is not the current number on the Trump Administration’s tariffs on Chinese goods. Currently, most goods from China have a 30% tariff on them between the 10% baseline tariff the Trump Administration has placed on imports from around the world and the 20% fentanyl-related tariff President Trump has placed on Chinese goods.

If the deal goes into place as laid out in President Trump’s Truth Social post, an additional 25% will be added to U.S. tariffs on goods imported from China while China’s 10% tariff on American goods exported there will remain the same.

Obviously, the magnets and rare earths, on which China has basically cornered the market, are important for the U.S. to be able to import. That may be China’s biggest leverage point in trade deal negotiations with the Trump Administration. On the other side, Chinese students being allowed to go to U.S. colleges and universities is a big leverage point for the U.S. on China. The Trump Administration moved to “aggressively” revoke visas for Chinese students, particularly those with ties to the Chinese Communist Party (CCP) or those studying in “critical” fields, after President Trump announced China was reneging on its rare-earth-related commitments in the deal to pause the more than 100% tariffs the countries had placed on each other.

Trump announcing Chinese students using U.S. colleges and universities as part of the deal garnered some criticism, pointing at such students as spies for the CCP. However, the aggressive move to revoke Chinese students’ green cards looks more like a leverage move by the Trump Administration. Ending that move just takes Chinese students’ use of American colleges and universities to where it has previously been while President Trump gets the rare earth and magnets import access for American companies he was seeking and the increase of U.S. tariffs on Chinese goods while China’s tariffs on U.S. goods stay where they are.

That is, of course, if this trade deal makes it through approval and implementation. Even if signed, we have talked before in this blog about China not following through on trade deals. We have only to look back on the Phase One Trade Agreement of President Trump’s first term to see an example. Or maybe we could look to the immediate past brought up above about Trump saying China reneged on the rare earth part of the deal to pause the extremely high reciprocal and retaliatory tariffs that were in place between the contries for 90 days to negotiate.

Obviously, there is more to the new deal than the highlights President Trump gave in his Truth Social post. However, it won’t be until the deal is approved and released that we’ll be able to examine all of its details and its effects or potential effects on U.S. shippers.

In the meantime, shippers have an indicator that tariffs on Chinese goods may be about to increase by an additional 25% to 55%.

Some critics point to the fact that there is no term limit to President Xi’s control of the Chinese government while President Trump is in a limited 4-year term without eligibility for reelection. This gives President Trump more urgency to get a deal done than President Xi has. That allows President Xi to take his time with this deal, meaning signatures may not be coming right away. That might even afford President Xi the leverage to try for more renegotiating.

I wrote Tuesday that I don’t like to count my trade deals before they hatch, and this one is no different. We could see movement this week to make the deal official, or it could drag out and possibly even fall apart. It would be surprising to see a trade deal with China to be the first new major trade deal to get signed after President Trump’s “Liberation Day” reciprocal tariff announcements. Of course, with the importance of China as a trade partner, maybe it shouldn’t be surprising.

Ultimately, shippers are left waiting and watching. But a potential deal that could bring predictability and stability to trade with China is within sight.