President Donald Trump announced in a Wednesday all-caps social media post that a “deal with China is done,” but there are still questions. This week, KRLD business expert, David Johnson weighed in on those questions.
“The stock market did not take off at 7:04 this morning in the futures when this was announced because we knew that this is a very good beginning but not an end,” he explained. Since shortly after Trump took office this year, the U.S. and China have been engaged in a tariff war.
According to Trump, People’s Republic of China President Xi Jinping still needed to sign off on the deal as of Wednesday. He also said that “full magnets and necessary rare earths will be supplied up front by China,” and that the U.S. will also provide for some requests from China, including allowing Chinese students to attend U.S. colleges and universities.
“Under President Trump’s leadership, the U.S. State Department will work with the Department of Homeland Security to aggressively revoke visas for Chinese students, including those with connections to the Chinese Communist Party or studying in critical fields,” said a May 28 press statement from U.S. Secretary of State Marco Rubio. “We will also revise visa criteria to enhance scrutiny of all future visa applications from the People’s Republic of China and Hong Kong.”
Overall, Trump said that the U.S. is “getting a total of 55% in tariffs,” and that China is getting 10%, adding that the “relationship is excellent” between the two countries.
“Adding to the China readout, President XI and I are going to work closely together to open up China to American Trade. This would be a great WIN for both countries!!!” he said in another Wednesday Truth Social post, following up Thursday with one that said “THE CHINA DEAL IS GREAT!”
Johnson said that there were signs earlier in the week that negotiations between the U.S. and China were moving forward, specifically from Commerce Secretary Howard Lutnick. As for the details Trump shared about the tariffs, he said there are still “a lot of questions.” For example, it seems that a 20% tariff on China meant to curtail fentanyl trafficking into the U.S.
might be eliminated.
“So presumably that’ll go away, because I’m sure the Chinese will say: ‘Oh, we’ll never do that again,’” Johnson said. “So, you get that back down again, we won’t get that money. Then 10% was the reciprocal tariff, which I guess stays around, and then 25% was already in place.”
Johnson also stressed that complicated trade deals typically don’t happen over the course of a few days.
“They’re very detailed and there’s a long list of, with great specificity, of all of the items that I’ve been asking about plus a lot more,” he said.
Regarding the magnets and rare earth minerals – which Trump also sought from Ukraine – Johnson said that the magnets are often used in motors and generators. He said that some countries with high supply currently have the market cornered on it.
He said that colleges and universities are probably excited about the announcement too.
“The the thing that nobody really talks about... is these are the only students at these universities that pay sticker price,” Jonson said of international students.
Therefore, universities tend to make a lot of money when those students choose to study at American schools, and even depend on those students.
“They’ve become in many cases very productive people and a lot of them stay here and a lot of our technology companies really rely on [them],” he added.
So, how might this deal impact small business owners and everyday American life? That’s not clear yet.