Trump's China strategy pays off, but XI has the decisive aces

Trump's China strategy pays off, but XI has the decisive aces

President Donald Trump has taken a great risk by relying on the fact that the United States can take a historically aggressive attitude towards China, the second largest economy in the world, and will thus emerge more. It remains unclear whether this risk will bear fruit in the long run. Nevertheless, Trump has shown an impressive success record in recent months: The stock exchange reaches record heights, the US economy has recovered in the second quarter and inflation has exceeded the predictions of an increase after the duty.

China's strength under XI Jinping

At the same time, the Chinese leader Xi Jinping is also on a wave of success. On Monday, Trump opened the opportunity to supply China with AI chips faster after previously blocked chips in the middle class. Despite the American tariffs, China has successfully found new markets to sell its goods and flood the world with its products.

XI has some trump cards: China remains the largest exporter of goods worldwide and thus has a significant impact. In addition, it controls almost the entire supply of rare earths that are essential for the production of electronics and for defense devices that are decisive for the national security of the United States. China has only hesitated the export permits of these raw materials, which causes resentment in the United States.

Trump's successes in the negotiations

This year Trump took on the role of the interferer to China. He raised the tariffs he had introduced during his first term - a trend that his successor Joe Biden has also continued. At the beginning of his second term, he set tariffs to Chinese goods to at least 20% and increased them to 145% in spring, which in fact led to a blockade of the trade with China's second largest trading partner.

In May, the negotiators of both countries succeeded in reducing tariffs to Chinese goods that were introduced this year to 30%. This reduction was noticeable for US companies that rely on Chinese products, but still remains significantly higher than the tariffs that the United States has raised for large trading partners in the past hundred years.

The effects on the US economy

In the past few months, Trump's negotiators have reached several concessions of China, including purchases from US soybeans and the cessation of antitrust investigations against some large American companies that could affect their business. While these concessions may not be of great scope, Trump still celebrated the income from tariffs that flowed into the US treasury every month due to the high tariffs in China.

Inflation has only increased slightly and therefore remains significantly below the highest levels of the past four years. The gross domestic product, the most comprehensive measure of the US economy, showed strong growth in the last quarter, although it also had warning signs. Job growth has slowed down in the past few months, but uncertainty about the tariffs has decreased, and some economic experts expect companies to resolve again in the coming months.

xis strategic position

Despite Trump's exchanges against China, US President XI treated relatively mild compared to aggression towards US allies such as the European Union and Brazil. This is because XI is also in a strong position: China holds a control over rare earths that are indispensable for high -performance magnets in different industries. The United States consider these resources crucial for defense and industrial production, but China controls 90% of global processing of rare earths.

In exchange for more rare earths, China has requested a relaxation of US export controls for critical goods, especially for advanced AI microchips. The Trump administration had issued strict guidelines for the delivery of these chips to China. On Monday, however, Trump admitted and allowed Nvidia’s H20 chips that drive China's groundbreaking AI model Deepseek to China. A consideration of allowing Nvidia to deliver a slimmed-down version of his highly developed blackwell chips were also made, although this was previously considered not negotiable.

conclusion: a power game between Trump and XI

xis also economically successful position shows that China is still able to develop new markets, for example in South America and Africa, which keeps the country's business activities stable. China's trade surplus reached $ 586 billion in the first half of the year and set a new record for a period of six months.

While XI drives his own strategy forward, Trump remains confident that he has the reins in his hand. This power game between the USA and China is far from over, and developments in the coming months will be of crucial importance.