Donald Trump and Xi Jinping have a deal. Or at least the contours of one. “Concepts of a plan,” as Trump famously described his domestic healthcare strategy.
Trump was in Malaysia over the weekend, and in a few days he’ll be in South Korea, where he and Xi will decide whether to informally ratify an arrangement negotiated by subordinates over two days in Kuala Lumpur. One of those subordinates, Scott Bessent, spoke to CBS’s Margaret Brennan about the “deal” on Sunday.
“That is effectively off the table,” Bessent said, of the triple-digit tariffs Trump threatened on October 10 in retaliation for China’s new rare earths export controls, which will apparently be delayed. “We had a very good two days, so I would expect that the threat of the 100% [tariffs] has gone away, as has the threat of the immediate imposition of the Chinese initiating a worldwide export control regime.”
There you go. Buy stocks. End of story. I’m joking, but honestly I could probably leave it there. Neither Trump nor the Chinese had any intention of following through on the threats which briefly rattled markets earlier this month. Certainly not Trump. The Chinese will of course keep the critical minerals card and play it from time to time, but the near-term threat of Beijing holding the supply chain for advanced chips hostage with so-called “long-arm” measures has diminished.
Those controls, Bessent reminded the world on Sunday, “were never imposed.” China merely “threatened to impose [them] in December.” Trump’s threat of 100% tariffs from November 1 was just an effort to secure the leverage necessary to preempt the imposition of the rare earths measures. “President Trump’s very good at creating leverage for us,” Bessent went on.
Brennan asked about the soybeans, which China stopped buying. Bessent declined to provide details of Chinese commitments on that front but parroted Trump in insisting “the soybean farmers are going to be extremely happy with this deal.” I can’t count the number of times I’ve heard Trump or his surrogates say that, verbatim, since 2017. America’s farmers would be wise to heed the wisdom of a famous Bushism: “You can’t get fooled again!”
The Chinese side appeared to confirm Bessent’s contention that a handshake deal’s near at, um, near at hand. It’ll include TikTok, a compromise around the ship quarrel which made headlines for the second time in 2025 this month and fentanyl (we all know how that goes: Beijing will make vague promises about cracking down on precursor to no discernible effect).
Asked if the US will lift any of the semiconductor export controls or otherwise moderate its own stance beyond the specifics mentioned on Sunday, Bessent told CBS no. “There have been no changes in our export controls,” he said.
Frankly, this sort of arrangement’s probably preferable to the asinine pursuit of a grand bargain à la Trump’s first-term China trade strategy. That — an actual deal complete with contractual commitments and enforcement mechanisms — is a pipe dream, and it’ll never work. Push come to shove, China would rather loose a plague on the world than sign up for something like that. (Too soon?)
The figure below’s a reminder: China’s export machine isn’t suffering from Trump’s shenanigans. They’re just diverting shipments to other places, and some of that product’s making it to the US anyway.
To be sure, the Chinese economy is stuck in the mud. But not because exports are hamstrung. Shipments abroad rose more than 8% YoY last month, the briskest pace of any month for 2025 so far even as shipments to the US plunged versus the same period a year ago.
Meanwhile, Trump claimed all sorts of ostensible deal “wins” while yucking it up in Kuala Lumpur, including agreements with Cambodia and Thailand, both of which said they’ll drop tariffs on US farm and industrial goods in exchange for product-specific exemptions from Trump’s “reciprocal” levies. Conceptually similar arrangements were agreed with Vietnam and Malaysia.
As usual, those deals weren’t “deals” on any strict sense of the term, and neither did a farcical rare earths MOU with Thailand count as a binding arrangement.
Naturally, Trump took credit for a ceasefire signing which found Thai Prime Minister Anutin Charnvirakul and Cambodia’s Hun Manet agreeing to the language of a joint declaration to deescalate a long-simmering border dispute. The Cambodian leader again promised to nominate Trump for the Nobel Peace Prize.
I read the White House’s announcement re: the trade deal with Malaysia this morning. I suppose Google News thought I should see it. It’s amazing the extent to which it’s basically all take with almost no give. Most mystifying: a $70 billion commitment for investment in the United States. I suppose Malaysia, between the private and the public sector, could come up with $70 billion if they absolutely had to, but it seems vanishingly unlikely. Their annual GDP is only ~$400 billion.
I’ve heard several analysts and such talk about how the post-WWII deal with the US was essentially a trade surplus wherein the producing countries then reinvested their surplus dollars back into US Treasuries and corporate bonds, essentially then financing our growth in what was a perpetual motion machine (for the last 70 years, anyway) until Trump upended this system quickly and with little (heeded) warning. So it’s not like we weren’t already getting trade ‘deals’ with the rest of the world, and certainly that system was built in a way that benefitted us (some of ‘us’ more than others, sure, but still).
I know smart people and Heisenberg readers get that, it’s just that it irks that hell out of me when people cheer Trump’s “deal making ability” yet don’t understand the above one iota.
What, no jokes about Bessent telling Martha Raddatz on ABC this morning “I’m a soy farmer myself”?
I’m trying to picture Bessent in his suit and tie plowing up a field with his John Deere.
With the Orange One it’s continually Groundhog Day with tariffs. We’ve stockpiled cat food, just in case. I’m sure the massive payments from tariffs will be hitting all our bank accounts soon. I’ll need something soon to offset inflation and a possible AI bust. Who knew extortion is the only thing you need for foreign policy when you’re the greatest nation mankind has ever known. No doubt this will be great comfort for everyone who loses health care and SNAP benefits. Meanwhile mega yacht sales are booming.
Give him the damn peace prize. like old actors that never won an academy award, finally they are given a “lifetime achievement” award at the oscars. Everyone knows it means nothing, but maybe it will shut him up.