University of Tokyo's Suzuki on US-China, Trade Tensions & Deals

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00:00Let's talk a little bit about how we're setting up for the conversations between President

00:04Trump and President Xi Jinping.

00:06Because now President Trump has come back from ASEAN, has come back from Japan, has

00:11now said that they have a trade deal with South Korea.

00:14How strong a position is he in order to negotiate with President Xi?

00:18Well, I think this is the bilateral context and the multilateral context.

00:25Similarly, still Mr. Trump is in a weaker position because of the lack of the solid supply chain

00:35resilience on the rare earth mineral.

00:38Well, on the other hand, multilaterally, Mr. Xi doesn't have the allies, but now Mr. Trump

00:44showing that there are lots of potential that he can diversify the supply chain on the rare

00:51earth minerals.

00:52So I think if Mr. Xi thinks that, you know, Mr. Trump is now expanding its ally network

00:59and then, you know, creating an opportunity for diversifying, then Mr. Xi will be in a

01:06less strong opposition.

01:08But who knows?

01:09I just find this very interesting that the Trump administration seems to be doing sort of a

01:14U-turn from what the Biden administration was doing, which was emphasizing allies in order

01:18to reign in China, and now you had hit all your allies, and now you're trying to make

01:23friends again.

01:24Yeah.

01:25Well, indeed.

01:26I think he understands that the United States is not perfect, and the United States is no

01:30longer in a position of strength, and he needs the allies and, you know, the much wider

01:36global supply chain support.

01:38So he made a deal with Australia, Malaysia, and then Japan, and South Korea.

01:46So I think this is a U-turn of Mr. Trump to come back to the alliance.

01:51We were just speaking to our Bloomberg columnist, John Arthur, and he was saying, I'm very cautious

01:56about calling these deals because we really don't have a lot of details on whether or not

02:01we're actually going to see follow through on them.

02:03What do you think?

02:04Well, I think, you know, the deal with Japan is somewhat similar, but I think one of the

02:12most important thing is that there is a commitment to this.

02:15Well, two days ago there was a big meeting with Mr. Trump and the Japanese businessman and

02:23making all this commitment to invest in the United States.

02:26So I think even though there are no details, the most important thing is that there are

02:32both sides are committed to this deal.

02:35And as long as, you know, there is a willingness to have the, you know, the deal to happen and

02:41to make the, you know, the relationship better with the United States and, you know, getting

02:47an access to the U.S. market, I think things work.

02:50With the warm relationship that President Trump showcased with Prime Minister Takaichi,

02:56we thought the bar was set very high for President Lee Jae-myung.

02:59But now we're getting more details and actually perhaps more details on that U.S. investment

03:05fund than even with the Japan deal.

03:07$150 billion in shipbuilding, $200 billion in cash, $20 billion only capped annually in investments,

03:14which of course the Bank of Korea had said that's sort of the maximum limit in order not to

03:19upset the currency markets.

03:21Has President Trump given, how much of the concessions has President Trump given in order

03:27to get some sort of agreement with its allies before meeting President Xi Jinping?

03:33I mean, I do wonder about how much of an upper hand he had going into the China meeting.

03:39Well, I think he has made not much concessions.

03:44I think at the end of the day, this is a deal between the tariff and the investment.

03:48So it is not a bigger concession that he had to make in order to get those investments.

03:56Because at the end of the day, the tariff is still a threat to both Japan and South Korea.

04:03And I think also at the end of the day, Japan and South Korea are the security allies.

04:09So, you know, the U.S. commitment is absolutely necessary for that.

04:15So I think this reestablishment of the relationship with the allies will create a much more boost

04:22for Mr. Trump with regard to the negotiation with Mr. Xi.

04:28But I think, you know, there is an understanding that Mr. Trump and Mr. Xi are separating the geopolitical deal

04:37to the geo-economic deal, which is about, you know, rarest mineral, the soybeans, et cetera.

04:45You know, this tariff negotiation, the economic trade negotiation is not linked and packaged with the security matter.

04:54So that's probably one of the aspects that will be interesting to see today's meeting.

05:01Which I feel is sort of going back to what the U.S. strategy has always been when it comes to its relationships with the world.

05:09However, when it comes to the potential concession on geo-economics, especially tech,

05:15President Trump has talked about being open to providing China access to NVIDIA's very advanced Blackwell's AI processors.

05:22How big would that be?

05:24Well, this will be big, but I think to a certain extent, I think there is a separation of the...

05:31Well, there is a clear line divided between, you know, the Blackwell H20 and the, you know,

05:38the more advanced chip for the AI, you know, designed for the AI GPU.

05:44So I think there is an understanding that what is the red line for the security matters

05:49and what is the acceptable line for the economy matters.

05:54So there are certain concessions that Mr. Trump has to make.

05:59But there are some sort of, you know, the last line of defense will be kept.

06:06On China's rare earth restrictions, I was speaking to the SK Group chairman, Chet Tenwon, yesterday,

06:13and he talked about how this issue is just a matter of pricing because there are rare earths elsewhere in the world.

06:21It's just a matter of getting them to the market.

06:24Is this a real threat?

06:26He didn't seem to think this was a big deal, that time would solve this.

06:30Well, I think it is...

06:32We need to think of the supply of the rare earth from the material and the processing.

06:37I think the problem is that, yes, you can find the rare earth everywhere in the world,

06:42but the problem is that China is dominating in the processing, you know, the processing layer.

06:51And China is making all this, you know, because the processing of the rare earth mineral creates a lot of, you know,

06:59the toxic waste.

07:00And, you know, China has much less and looser restriction on the industrial waste.

07:07So it is very difficult and it is more costly if you do that in, you know, major industrial countries.

07:15So we need to find the other supply chain route of where we can do the processing.

07:24So I think Mr. J may be a little bit optimistic about this.

07:32And I think there must be some more investment in the processing side.

07:37Rare earths, of course, are a long-term strategy for President Xi Jinping,

07:41where he has his natural resources, the manufacturing power of his country.

07:46Is there a risk that, given President Trump's negotiating style, where he wants short-term results,

07:53that he might give away too much?

07:55Yes, there is a possibility.

07:57But I think, you know, it's not just Mr. Xi.

08:00It's an entire, you know, Chinese regime investing in this, you know, dominance in the rare earths.

08:08Not just rare earths, but solar panel, wind turbine.

08:11There are many things that China dominates in the global market.

08:15And I think this is a strategic process that, you know,

08:21that China has trying to, you know, dominate a certain growth area,

08:27such as the renewable energy.

08:30And I think, you know, you can't do that only for the short, you know, the short-term interest.

08:36So I think the United States has to rethink of its strategy

08:40and create more resilience in the long term.

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