Trump, Xi Standoff With World Economy at Risk

Win Thin, Chief Economist at Bank of Nassau, discusses geopolitical headwinds impacting global markets including US-China trade relations and the Peso rout in Argentina.

Six months into Donald Trump’s trade war, the resilience of Chinese exports is proving just how essential many of its products remain even after US levies of 55%.

Every day, about a billion dollars worth of goods is crossing the Pacific from China to the US, with the amount ticking up in September from August. Despite double-digit drops in the value of overall trade during the past half a year, some products have recently seen an increase from 2024, defying trade strains between Beijing and Washington.

The upshot is that US tariffs appear somewhat limited in their ability to control what American firms import, as China’s sway over sectors such as rare earths and electronics makes its products hard to dislodge, at least in the short term. That may change over time, especially if Trump further hikes tariffs, as the Republican leader has repeatedly threatened to do.

“China’s strong position in global supply chains gives it some bargaining power with US importers in the near term,” wrote Bloomberg economists Chang Shu and David Qu, who cautioned other countries can’t quickly displace China as a supplier to the US. “Realigning production will take time,” they added.

All that’s giving President Xi Jinping more bargaining power as his trade negotiators head into talks aimed at extending a 90-day tariff truce that’s set to expire in November. In the third quarter, more than $100 billion worth of Chinese goods arrived in the US, helping Beijing keep economic growth on track for its annual target and pushing the bilateral trade surplus up to $67 billion.

Trump on Tuesday predicted an upcoming meeting with his Chinese counterpart would yield a “good deal” on trade, while also cautioning the expected sitdown at a summit in South Korea next week could still fall apart. The US leader has listed rare earths, fentanyl and soybeans as the top trade issues for his side to discuss with China.

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