Deal, Deja Vu or Delusion?
Round 2 may be ending, but the economic war has just begun
“Even if tariffs thaw and soybeans sail, the other trenches stay fortified.”
Talk about deja vu. A month ago, in September, the US and China inked a deal for TikTok and used the phrase “framework deal.” It was vague and unambiguous.
Now, one month later, US Treasury Secretary Scott Bessent, after meeting Chinese trade negotiators in Malaysia, has announced a “framework” for Washington and Beijing to ramp down tensions. The details are scarce, with China “expected” to purchase US soybeans and delay its rare-earth curbs by a year. But, as headlines buzz, nobody is asking the most fundamental question. What does China want in exchange?
The US-China fight has entered a dangerous moment. Learn what most global businesses are missing in the latest geopolitical foresight briefing.
NAIVE OPTIMISM
Put this question aside for a moment. A bigger, far bigger unknown is what happens after a deal is inked. Or put differently, can there ever be a deal between the US and China?
In Round 1, the US and China raised the tariff walls on each other—and then froze them. Now, if Round 2 ends, it will be due to China’s shocking rare earth moves, which jolted the US and the broader world.
If Bessent is correct, and China increases soybean purchases (helping American farmers) and restarts rare earth exports (calming global supply chains), what about the myriad of other areas where the world’s two largest economies are at loggerheads?
TECH TRENCHES
Take some of the latest tech and trade moves China has made: Beijing has told firms to ditch Nvidia, opened an antitrust probe into Qualcomm, and demanded US chipmakers hand over “sensitive” operational data.
Unless China reverses course and reopens its market without limits, these decisions will struggle to be walked back. The sheer differences between the US and China have become too large to overcome, deal or no deal. Those thinking that a trade deal inked on the back of the Trump-Xi meeting at APEC can restore normality to the world are not seeing the full picture—what the signals above point to.
Even if tariffs thaw and soybeans sail, the other trenches stay fortified.
HYPER UNCERTAINTY
The new status quo that the global economy has to function under is one where the US and China are constantly drifting between friend and foe. It is permanent greyness. No deal can change this.
At any moment, these two nations can return to fighting. And considering the number of flashpoints, in particular China’s continued support for Russia in the Ukraine war, and separately, the trade deals America is cutting that specifically edge out China (i.e., the 40% transshipping tariff as part of the US-Vietnam trade deal), another flare-up may be closer than most realize.
DEAL OR DELUSION
Who holds the cards when it comes to the next fight? And, what kind of “bets” do economies and businesses make in a climate where the US and China could get bloody in the blink of an eye?
Deals are supposed to bring back clarity and stability. But the latest US-China skeleton agreement actually makes the situation worse. Few can depend on this deal. And even fewer view this deal through a long-term lens. The framework deal does not cool the conflict — it just lowers the flame until the next boil
Deal or delusion, the US-China fight is just getting started.
-ABISHUR PRAKASH AKA. MR. GEOPOLITICS
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