SCOTT SIMON, HOST:
President Trump has made his tariff war against China one of the top priorities of his second term. But earlier this week, he met with China's leader Xi Jinping, and the two men agreed to what's been described as a truce. The U.S. will reduce some of its tariffs, and in return, China's agreed to postpone strict new rules on the export of rare earth materials. Julian Gewirtz joins us now. He was senior director for China at the White House National Security Council during the Biden administration, now a senior research fellow at Columbia University. Thanks for being with us.
JULIAN GEWIRTZ: Great to be with you, Scott.
SIMON: How do you see this agreement? Is it an agreement, a truce?
GEWIRTZ: Well, you know, it's been described that way, but in fact, I think the situation is a little bit more complicated. From one perspective, the United States and China have decided things maybe got a little bit too hot in this recent period of brinksmanship, and they wanted to step back from those recent escalatory measures that you described. But on the other hand, we're really not just back to where we started. From the perspective of the United States and our interests, we really are worse off because China has introduced some new tools that are still on the table, and they can pick up those tools at any time and use them in ways that would be, I think, quite concerning.
SIMON: Like what?
GEWIRTZ: So the best example there are those rare earth, critical minerals, export controls that you alluded to. This is a new tool from China, something that they didn't have before this recent trade war, where they decided to develop it because, in the face of President Trump's tariffs and other measures, they felt - Xi Jinping felt a need to punch back harder than China had punched back before. So they've now said they'll delay the implementation of that policy for a year. But if we've learned one thing in the course of 2025, it's that the U.S.-China relationship is going to be unpredictable. And, you know, I would be candidly quite surprised if we don't see at some point in the next few months a return to a kind of escalation or brinksmanship that we've seen already this year.
SIMON: The U.S. has tools, too, right?
GEWIRTZ: Absolutely. And I think one of the really interesting things about this moment is the place that we're at right now in U.S.-China relations is not a good one for the United States because China believes that it has this powerful new tool that I was just describing and that as a result, it should get a veto on aspects of American policy toward China, which is of course not acceptable. So for the United States, the biggest question at the moment is not just what are the contours of this truce going to look like, but how do we regain some of the leverage that we had a year ago before this, particularly, I think, poorly managed trade war. We have leverage. We have choke points vis-a-vis China. We're the world's largest economy. So I very much hope that we don't stand for a situation in which Beijing believes that it can dictate the terms of our policy toward China.
SIMON: What kind of effects do you foresee over the next few months for American consumers when they go to buy almost anything?
GEWIRTZ: Well, President Trump's tariffs have definitely, among the other effects, raised prices for American consumers. So dropping down those tariffs, as we've seen, is a good thing from the perspective of, you know, sticker prices at stores. And the end of this period of intense volatility and uncertainty could also be a good thing for that perspective. But stepping back, you know, I'm a little bit skeptical that many in the economy - you know, the big actors who shape prices and shape what's on the shelves - believe that this truce is really going to last for a year. You know, we have a few key milestones that will help us understand that. The next big one...
SIMON: Yeah.
GEWIRTZ: ...Is President Trump has said he will go to China in April. If we can make it from here to April without a return to escalation, again, I'd be quite surprised.
SIMON: And in the half-minute we have left, are you worried about long-term consequences of this trade war?
GEWIRTZ: I am, but I'm worried about them more from a strategic perspective, from the perspective of China thinking, as I was saying, that they now have even more leverage over the United States than they ever did before. That to me is a significant negative development with long-term implications for American interests that was not the case a year ago.
SIMON: Julian Gewirtz is a senior policy - who was a senior policy official during the Biden administration, now senior research fellow at Columbia University. Thanks very much for being with us.
GEWIRTZ: Thank you. Transcript provided by NPR, Copyright NPR.
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