“A handshake for a framework.”
That’s how Howard Lutnick described the outcome of US-China trade talks in London this week. “A handshake for a framework.”
Markets will be forgiven for emitting a wry chuckle. “Handshake for a framework” is to international trade negotiations what “concept of a plan” is to domestic health care strategy drafting.
Long story short (and I’m not actually sure there’s a long version of this story), Lutnick and Scott Bessent flew halfway around the world to secure assurances from Xi Jinping’s envoys that Beijing will abide by the still vague “terms” of what the media’s now calling “the Geneva consensus,” a needlessly grandiose reference to last month’s handshaking.
In the weeks following the pow-wow in Switzerland, The White House was aggrieved that Beijing continued to throttle rare earth shipments. Lutnick’s “framework” is supposed to address that. China, he said following two days of talks in the UK, will make critical metals available and in return, the US could loosen restrictions on chip technology, jet engines and student visas.
I’ve said this over and over again, and it’s even more apparent now than it was five weeks ago: The Chinese are stringing Trump along. I’m reasonably confident Lutnick and Bessent are aware of that, but… well, what can you do? What can they do? If you’re a top general in the Russian military, what do you tell Vladimir Putin when he asks, halfway through the summer of 2022, how it’s going in Ukraine? “Oh, it’s goin’ great, sir. We should have this wrapped up in three weeks, tops.”
Commenting in a truly absurd — even by his high standards for absurdity — all-caps TruthSocial post, Trump said, among other things, “FULL MAGNETS WILL BE SUPPLIED, UP FRONT, BY CHINA.”
No half-magnets or back-ends here, folks. Full magnets, up front. If you’re a US pier, get ready. Pack up all the paper clips and loose screws and move them off the premises and far, far away. Because Xi’s sending a fleet of giant containerships loaded down with enough samarium magnets to pull the moon out of the sky, and he’s sending them right now, “up front.”
In the same social media post, Trump was elusive about what, exactly, Xi will get in return for freeing up “ANY NECESSARY RARE EARTHS.” “WE WILL PROVIDE TO CHINA WHAT WAS AGREED TO,” Trump declared, which is just barely more helpful than saying “we will give China what we will give them.”
The only details Trump provided regarding US concessions revolved around Chinese students, who can continue “USING OUR COLLEGES AND UNIVERSITIES.” The ones still allowed to accept foreigners, anyway.
He went on to tally the hodgepodge of US levies currently in place on Chinese goods, a figure he juxtaposed with what it’s probably fair to describe as a deliberately understated summation of China’s retaliatory measures. “WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%,” Trump said, calling the bilateral relationship “EXCELLENT!’
Again, all of that’s completely ridiculous, and everyone — including and especially the Chinese — knows it. Trump’s living in a fantasy world. Why would China, which is bracing for a possible military confrontation with America at some for-now-undetermined date, move heaven and (rare) earth to supply the US with magnets it needs to make fighter jets and bombs?
Note that these talks didn’t address, in any substantive way, bilateral trade. China’s succeeded, already, in stymieing Trump such that the two sides are merely debating compliance with the terms of a previous meeting which, by every account I’ve read, wasn’t substantive either. The next meeting will be in Antarctica, where Lutnick and Bessent will convene with a trio of CYL members to come to a consensus on what hors d’oeuvres were served this week in London.
Spoiler alert: China’s not going to change their policy on rare earth exports. Hell, it’s not even clear what that policy is. They’ll loosen up, temporarily, in areas where they think Trump’s watching — “FULL MAGNETS” — and go on about business as usual. And business as usual is shrewd, self-serving, crafty and, where it needs to be, underhanded.
As one US rates strategist put it on Wednesday, “We’re reminded of the middle-management adage that any meeting which ends with the decision to have another meeting really wasn’t that productive of a meeting.”
And just think, all those Magnet ships can be loaded for the return trip with the wheat Xi promised to buy 5 years ago.
Compare the production rate of US weapons vs the production rate of AI semis.
In six months, China can get all the NVDA AI processors it will need to tide it over until the national shift to Huawei AI processors. Meanwhile, in six months the US might replace maybe half of the missiles it shot off against Houthi drones plus build about 80 more F35s, but the DoD is cutting its 2026 procurement for F35 anyway. Of course, China will keep slow-walking REE exports to the US, while NVDA will enthusiastically accelerate semi deliveries to China.
(FYI Trump’s military parade is going to cost very roughly a third of the cost of replacing the SM2/6 missiles fired in the Red Sea.)
Meanwhile, playing off REE vs semis keeps the broader China tariff question in limbo – just where Xi wants it.
Meanwhile Russia and Ukraine are redefining how modern warfare is conducted while we still act like our military needs to keep looking like it did 20 years ago.
“In many ways, Donald Trump is an unserious man. But the consequences of putting him back in the White House are extremely serious.”
– Kamala Harris
China clearly listened to the first part of that quote while Americans ignored the entire thing.
Remind me again why so many people still think Trump is a good negotiator? Oh, that’s right – he pretended to be one on TV. If I’m ever suffering from a rare disease, I’d like Hugh Laurie to be my physician.
The stupidity of it all boggles the mind.
Also, the Fulbright board just resigned (yes, the entire board) due to meddling from the Trump administration. It is going to take decades, if not centuries, to undo the stupidity.
Oh and he’s making sure to commemorate the traitors of the confederacy by reinstating their names on our military bases. Like I said yesterday, his base still believes in the Lost Cause while simultaneously trampling over blue states’ rights. They don’t actually care about any freedom other than their “freedom” to restrict the rights of others.
Freedom for me and not for thee.
Some pigs are more equal than others.
“The next meeting will be in Antarctica…”
I didn’t flinch when I read this, and it took a while for me to realize this was a joke. Such is the state of real-world events, why wouldn’t the next meeting be in Antarctica?
They figured they’d meet with China and the penguins from the Heard and McDonald islands to kill two birds with one stone.
It’s Trump’s magnetic personality that convinced Xi to cave in.