Input Stories

President Trump announced a trade deal with China following a meeting with Chinese leader Xi Jinping in South Korea (The Wall Street Journal, subscription).
 
The details: The agreement, which may be signed as early as next week, aims to ease trade tensions between the two nations, though the exact terms have yet to be released. According to the Journal:

• The U.S. is cutting tariffs on China by 10%, President Trump said, in exchange for a promise by China to take “very strong action” on chemicals used to produce fentanyl. After the reduction, U.S. tariffs on Chinese imports will be 47%.
• “China promised to ease some of the controls it imposed on exports of processed rare-earth minerals for one year” as well, in exchange for a one-year pause on “[U.S.] export restrictions to certain subsidiaries of already blacklisted entities.”
• China also agreed to purchase large quantities of U.S. soybeans, according to President Trump.
• “Both sides placed a one-year pause on reciprocal port fees on each other’s vessels.”

A trade-heavy week: This announcement is the last in a series that President Trump made this week during his trip to Asia. Previous announcements included trade frameworks with Cambodia, Malaysia and Thailand, a critical minerals framework with Japan and new memoranda of understanding on technology with Japan and Korea.
 
The big picture: While the agreements with U.S. allies in Asia provide more direction on the administration’s approach to new trade deals and its attempts to counterbalance China in the region, they follow months of upheaval set off by the president’s imposition of sweeping tariffs back in April and do not reduce the tariff burden on imports of critical industrial inputs.

• The new agreement with China also provides little insight into the medium- to long-term future of this relationship, as the details are unknown and the scope of the agreement limited.
• Meanwhile, the U.S. Trade Representative has opened up a Section 301 investigation as to whether China has implemented its commitments fully under the Phase One Agreement.

North America: For North American allies, the instability is still ongoing. President Trump announced on Saturday that he would increase tariffs on Canada by 10%, following a Canadian ad that featured anti-tariff quotes from President Ronald Reagan.  

• The president’s Truth Social post adds to the uncertainty surrounding the upcoming joint government six-year review of the United States–Mexico–Canada Agreement—a signal achievement of President Trump’s first term, under which Mexico and Canada together surpassed China as America’s foremost trading partners.

NAM advocacy: Throughout this past year of fast-changing trade policies, the NAM has offered constancy—both to manufacturers and to the administration.

• For manufacturers, the NAM has engaged the administration regularly on manufacturers’ priorities—from Section 232 investigations to related policies like fees on Chinese-built ships—underscoring the need for consistency and certainty.  
• For the administration, the NAM has offered an unwavering and positive message: that in offering manufacturers stable, predictable policies, it can achieve its overarching goal of restoring American dynamism and dominance.

The NAM’s policy vision: The NAM’s U.S. Manufacturing Investment Accelerator Program —a tailor-made policy solution for the administration—will advance the president’s goals to make the United States the best place on Earth to make things. It will do so by giving manufacturers already investing in the United States an on-ramp to build even more in the United States, through duty-free access (or a “speed pass”) to import the must-use, must-import, essential inputs we need to build, expand and innovate.

• By the numbers: Even if every factory in the United States ran around-the-clock, U.S. manufacturers can produce only 84% of the critical inputs we need to make more things in America—inputs like critical minerals, chemicals and machinery. For U.S. manufacturers to build a factory, expand a facility or create a product, the other 16% of these inputs must be imported. Lowering the cost of those inputs will spur more investment and innovation for manufacturers in the U.S.
• Value-add for critical inputs: Every $1 of critical inputs that U.S. manufacturers import generates $1.40 of U.S. manufacturing output—and enhances our domestic manufacturing capacity.
• Strengthening America’s manufacturing base: Manufacturers already investing in the United States need it to be easier, not harder, to build even more in the United States. Duty-free access to these critical inputs will deliver on the president’s goals.