US-China Trade Truce Is a Cautionary Tale
Export controls on high technology can be a legitimate national-security tool. But the US can’t ignore the cost.
China’s chokehold.
Photographer: Doug Kanter/BloombergThe US appears to have employed a novel tactic to pressure China into resuming the flow of crucial rare earths and magnets: first imposing and then trading away a slew of its own restrictions on critical exports. The gambit may have worked for now. That doesn’t mean it should become a habit.
The terms of the truce struck after intensive talks in London last week remain vague. China will reportedly issue six-month licenses to supply American companies with rare earth elements and the permanent magnets made from them, which are crucial to everything from electric vehicles to wind turbines to nuclear submarines. In return, the US is expected to lift some or all of the retaliatory measures it recently announced, including restrictions on student visas, chip-design software, nuclear materials, parts for jet engines, and ethane, used in the process for making plastics. Negotiators must still work out a broader deal to avoid a return to full-fledged tariff war.