Derek Scissors on US-China Relations, EV Mandates, and Budget Bill Fallout

US-China Relations and Trade

• 💬 The recent call between the US President and Chinese leader Xi Jinping was a positive step, but differing readouts suggest ongoing challenges.
• ⚠️ China's readout indicated a desire for a change in US posture on export controls, which is a complex issue given US concerns about AI and other strategic areas.
• 📈 The US has historically not benefited from meetings with China, suggesting that any temporary truce is likely to be short-lived and eventually "blow up" due to US dissatisfaction.

EV Mandates and Budget Bill

• ⚡ EV tax credits are unlikely to be reinstated, despite Elon Musk's opposition to the budget bill.
• 📉 The rollback of IRA cuts in the House version of the bill may involve extending timelines for production and investment tax credits and making technical changes to foreign entity of concern rules.
• 💰 Conservative holdouts on the budget bill, such as Mike Lee and Rick Scott, may not be swayed by Elon Musk's public opposition.

Rare Earth Magnets and US Preparedness

• ⚠️ US preparedness regarding rare earth magnets has been a significant issue for years, with the US government and businesses being unprepared for potential disruptions.
• 🏭 Chinese control over rare earth magnets poses a risk to auto production in the US, Europe, and India.
• ⏳ It is suggested that China could ease the supply of rare earth magnets to influence upcoming negotiations.