After all the doom-and-gloom hand-wringing, it took a whopping two days for the US and China to reach a trade deal. It covers a lot of ground, and there's still work to be done, but it looks like a resolution is right around the corner. And it all happened without an economic catastrophe, too! Let's check it out.
Here are Five Fast Facts about the US/China trade deal:
- 🧲 Magnet Grab - The deal secures China supplying magnets and rare earths minerals to the U.S. for at least six months. That’s stuff used in high tech electronics, rockets, and maybe your gaming console. Another political battle will be fought then, but hey, there's nothing our government is better at than kicking the can down the road, right?
- 🤝 Tariff Tag-Team - The U.S. will keep a total of 55% tariffs on Chinese goods (combining old and new taxes), which includes the 10% baseline for all countries, 20% extra for Beijing's part in the fentanyl crisis, and another 25% for unfair trade practices. In return, China will charge 10% on U.S. imports. Kind of a, "yeah, us too!" sort of move.
- 🧑🎓 Student Swap - The big prize for China is that Chinese students can continue attending U.S. colleges. No need to rescind that acceptance letter for math camp!
- 🤷 Market Plateau - Stock markets mostly shrugged. The Dow was flat, the S&P dipped about 0.3%, and the Nasdaq fell about 0.5%. Investors weren’t buying party hats, but maybe that's because they finally figured out the huge threats were merely a negotiating tactic.
- 👍 Still More - The deal is being billed as more of a framework than a finalized agreement, but it does solidify the major pain points on both sides. Both countries will have to officially ratify it, but it seems the worst of the disagreements are over.
🔥Bottom line: Whether it’s a big win or just a fancy handshake remains to be seen. Time will tell. For us little people, it does seem like there may be a bit of an uptick in prices because of the tariffs that remain in place, but it should level out the steep playing field that American companies and workers have been on for years, so in the long term that's great. And don't forget it's not nearly the 145% that was threatened initially! And all this happened without a major worldwide economic collapse, so there's that, too.
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