MICHEL MARTIN, HOST:
Let's go back to another major story we've been following - President Trump's tariffs. Those tariffs on imports from most countries are at 10%. His tariffs on China, though, 145%. China has retaliated with its own triple-digit tariffs, but Trump's commitment to the strategy continues. In a post on Truth Social last week, Trump threatened sanctions on entities buying oil from Iran, and China buys almost all of Iran's oil.
STEVE INSKEEP, HOST:
Now, the White House has framed any negotiations between the two countries as a matter between their presidents, Trump and China's Xi Jinping. But neither leader seems to be willing to make the first move. A Martínez spoke with Orville Schell. If you follow China, you hear this name. He's been an authority for decades. He's the director of the Center on U.S.-China Relations at the Asia Society.
A MARTÍNEZ, BYLINE: As the geopolitical order shifts, is this China's moment to seize?
ORVILLE SCHELL: Well, I think there is an excellent opportunity for China to move into the space being left by Trump, sort of vacating the world. After all, nature abhors a vacuum. However, I'm not so sure that Xi Jinping and China have the skills or the ability. We find ourselves in a place where I think both leaders, Donald Trump and Xi Jinping, are very thin-skinned, very sensitive to making any concessions which might appear to be hallmarks of weakness. So this means that we're in a kind of a retaliatory spiral, where neither side wants to sort of make the break that might stop the spiral.
MARTÍNEZ: How ready is China for this kind of trade war?
SCHELL: I think China is a very export-dependent economy, and to keep their growth rate up, they have to manufacture way more than they can use.
MARTÍNEZ: How damaging could this be to China long-term?
SCHELL: Well, I think it can be quite damaging. It also could be very damaging for the United States because a couple of things are really important here. One are the choke points that each country has on the other, and we are using those in the United States. For instance, one choke point the United States has is microchips. But China also has choke points, which it is starting to use. Rare earths would be one for magnets, for cars, you know, military hardware. Rare earths, it turns out, are a small element, but an absolutely critical one in sort of modern manufacturing.
MARTÍNEZ: When you mentioned rare earth, Ukraine and the United States just wrapped up and signed their deal for rare earth minerals. How much of a blow is that for China, considering that that is one of the big things that China has as an advantage - the majority of the rare earth minerals on the planet?
SCHELL: Well, here's the problem about the Ukrainian deal and our mining of rare earths within the United States itself. We do not have the capacity to extract the minerals we need from the ore. Almost all of the rare earth ore that is mined around the world goes to China for processing. So they will still have a lock on a very important part of the production of rare earths.
MARTÍNEZ: Now, we've just been talking about the two heavyweights in this fight, China and the United States, but how much of a disruption will there be for the rest of the world as the United States and China figure out who's going to win this battle?
SCHELL: Well, if the United States tariffs of 145% remain, China is going to be even more inclined and under pressure to export elsewhere, and possibly at more reduced costs. So let's just look at Europe. They could pretty much wipe out the European auto industry, which is the heart and soul of the German economy.
MARTÍNEZ: Yeah. Essentially, what we're talking about higher costs for manufacturing, higher costs for everything, the supply chain possibly being disrupted again. I mean, are we talking about that kind of thing again?
SCHELL: Yes. I mean, the global supply chains are infinitely complex, where products, before they get to the consumer, ricochet back and forth from country to country, and supply chains are dependent on many other places. And we sort of confected this reliance on China at a time where we thought, well, political systems don't matter. And now we discover that political systems do matter. That if Russia attacks the Ukraine and were China to do something in the South China Sea or the Taiwan Straits, suddenly China's form of governance and whether we have good open channels with them to negotiate solutions, matters immensely. But everybody's in bed with everybody in a geopolitical world that is - got tremendous tension points that remain not only unresolved, but becoming more fraught.
MARTÍNEZ: Orville Schell is the director of the Center on U.S.-China relations at the Asia Society. Orville, thanks a lot.
SCHELL: My pleasure. Transcript provided by NPR, Copyright NPR.
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