The state of U.S.-China trade

Marketplace

This episode of Marketplace explores several shifting economic landscapes, beginning with the current state of the U.S.-China trade war and

Key takeaways

• Current average tariffs on Chinese goods are approximately 20 to 30 percent, a decrease from previous peaks (Ed Gresser).
• Copper prices have reached record highs due to strategic demand for AI infrastructure, data centers, and defense systems (Jacob White).

Main topics

• U.S.-China Trade War
• Copper Market and Global Growth

Notable quotes

It's more like both sides have been bloodied a bit and they're feeling it in their best interest to, you know, not continue that for a while.

Conclusion

The episode provides a comprehensive look at how geopolitical tensions

Transcript preview

Speaker 3 (0:01) Oh, look, trade and tariffs back in the news from American public media. This is Marketplace. Speaker 3 (0:17) In Los Angeles, I'm Kai Risdahl. Monday, today, 21 September. Good as it always is to have you along, everybody. We're going to mostly take a pass on the old standbys this week, jobs and inflation and data. And we are turning for our economic through line instead to foreign affairs. China's President Xi Jinping is headed to Washington this week. Our slice of it, at least to start. Is the on again, off again, on again, off again trade war between the two biggest economies in the world? And if you have lost track of where things stand, join the club. Marketplace's Justin Ho gets us going with a refresher. Speaker 7 (0:54) It wasn't too long ago that tariffs on Chinese goods were skyrocketing. Back in the spring of last year. U.S. tariffs on Chinese goods reached 145 percent at their peak. Megan Schoenberger is senior economist with KPMG. She says China was hitting back, too. Reciprocal tariffs on U.S. goods reached 125 percent. But in the time since, tariffs have come down. Ed Gresser with the Progressive Policy Institute says when you average the tariffs that are in place right now. Speaker 8 (1:22) Most of the things you're buying in a store that are Chinese made will have a, you know, about a 20 to 30 percent tariff, depending on the type of product. Speaker 7 (1:31) Gresser says that's still higher than tariffs were during the Biden administration. But he says it is a sign that the trade war is on hold. Speaker 8 (1:38) It's not. like issues are settled. It's more like both sides have been bloodied a bit and they're feeling it in their best interest to, you know, not continue that for a while. Speaker 7 (1:49) Imports from China have been picking up this year. Megan Schoenberg with KPMG says that's been fueled by demand for computers, data storage devices, and other components needed to build out AI infrastructure. It is the main driver of why we see a larger trade deficit in the most recent numbers. And a lot of these products, importantly, are exempted from tariffs. But exports to China have not been very strong. Earlier this year, China said it would buy about 25 million metric tons of American soybeans. But Naomi Bloom, with Total Farm Marketing, says at this point, China has purchased approximately half of that. The Trump administration has also claimed that China will purchase about $17 billion worth of cotton, sorghum, corn, and other ag products. Bloom says that would be a huge relief for American farmers. When you have over $6 diesel, the farmers are still not making money because they're getting ready to harvest. And, you know, some of those combines take 300 to 400 gallons of diesel. But so far, Bloom says China hasn't really shown up. I'm Justin Ho for Marketplace. Speaker 3 (2:52) 300 gallons of diesel at six bucks a whack, right? Wall Street today, well, my goodness, traders were in quite a good mood. Oil fell, stocks went up. Happy Monday. We'll have the details when we do the numbers. All right, let's talk commodities here for a bit, shall we? Not oil, the commodity most in the news of late, I know, but rather a commodity that arguably can tell us almost as much as crude about the global economy, specifically about the prospects for global growth. Copper. As its price goes up, so too does the outlook for the global economy because copper is used in so many different industries. And copper prices have indeed been going up. 45 % this year so far, a record high earlier this month. But as Marketplace's Henry Epp reports, there are some things going on in the copper market right now. Speaker 5 (4:02) It wasn't that long ago that the price of copper could kind of tell you how the economy was doing, says Ian Lang at the Colorado School of Mines. And so if you saw a sort of uptake in demands for copper, you said, oh, OK, right, we're building more houses, we're building more cars, right? So things must be going well in the economy. And yeah, we do still use copper in cars and houses and appliances, but says Jacob White at Sprott Asset Management. Speaker 7 (4:25) In the world of 2026, it's really more about Speaker 5 (4:29) the strategic end uses. These days, tons of copper goes into data centers, electricity infrastructure, and defense systems. And because it's being used for strategic industries, the price of copper is a bit less tied to broader ups and downs in the economy. Speaker 7 (4:46) When electricity grids, for example, or AI data centers or defense programs are procuring copper, it doesn't necessarily matter to them that copper is at an all-time high. Speaker 5 (4:56) And there are factors besides demand keeping that price high. First, there have been a bunch of recent disruptions at copper mines around the world, says Natalie Scott Gray at the financial firm StoneX. Speaker 4 (5:07) We've had earthquakes, we've had flooding in Indonesia, which really can't be helped. Speaker 5 (5:13) And many of those mines are old, so they're getting more expensive to operate. Then there's tariffs. The Trump administration has been signaling that it might tax imports of refined copper for over a year now. It hasn't done it yet, but companies are still sending tons of copper to the U.S. to get ahead of tariffs. And that has global implications. Speaker 4 (5:33) So we've had this extreme tightening in the market outside of the U.S., and that's really been the primary driver. why we have very high copper prices. Speaker 5 (5:43) All that, Scott Gray says, is diminishing Dr. Copper's accuracy as an economic forecaster. I'm Henry Epp for Marketplace. Speaker 3 (6:08) I'm going to preface this next item with a warning that it's a tad weedy, a little bit dense, but it's important. So bear with me. Last week during his press conference, Chairman Kevin Warsh was asked about something called the neutral rate, the neutral rate of interest specifically, and what he thought of it. It's useful academically. It's Speaker 7 (6:29) a discussion to help us think about policy. Do I think it has any operational effect on decisions that we make today? No, I don't. Speaker 3 (6:39) Useful academically, but not operationally. We have gotten Courtney Brown from Axios, also one of our Friday regulars, on the phone to talk about that a little bit, to dig in. Ted, Courtney, so good to talk to you, even if it's not on Friday. Speaker 6 (6:52) Even if it's not on a Friday, good to talk to you too. Speaker 3 (6:54) Okay, so we're