Gordon Chang on US-China Trade Relations and Playing Rough

US-China Trade Deal Negotiations

• 🇺🇸 The US Trade Representative discussed potentially pushing the August 12th trade deal deadline with China, aiming for a more balanced and open relationship that protects American industries.
• ⚖️ Current tariffs on China are approximately 55%, with a potential to snap back to over 80% if a deal is not reached.

China's Leverage and US Response

• ⚠️ Gordon Chang highlights China's violation of a previous agreement by restricting the export of rare earths to US defense contractors.
• 💡 Chang argues the US should not be negotiating but instead imposing higher tariffs and reconsidering the sale of advanced Nvidia chips to China, given the lack of reciprocal rare earth supply.
• 🚢 China's dominance in critical minerals, supplying around 90% of the world's rare earths, creates leverage over the US military supply chain, impacting manufacturers of drone parts.

Strategic Leverage and National Security

• 🚀 Chang suggests the US has leverage over China through Boeing parts and services, capable of grounding China's fleet.
• 🚫 He opposes Chinese investment in US companies, particularly in battery and agricultural sectors, citing national security risks due to potential Chinese agents and operatives.
• 💊 The US should prioritize shifting pharmaceutical and active pharmaceutical ingredient production out of China, a move that could be executed faster than relocating rare earth supply chains.

Geopolitical Tensions and Sanctions

• 🚢 China's deployment of submarines for joint naval exercises with Russia and reinforcement of their partnership raises concerns.
• 🌍 Chang believes the US should impose secondary sanctions on countries like Turkey, India, and China for buying Russian energy, and on China for its significant purchases of Iranian oil.
• 🚩 Failure to impose costs on China for its actions will be perceived as fear and weakness by Beijing.