Day 2 of the U.S.-China summit

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Kimberly Adams (0:31)

Day two of the U.S.-China Summit. And what bringing race to town can do for a local economy.

From Marketplace in Washington, I'm Kimberly Adams. Chinese President Xi Jinping is continuing his meetings with President Trump today. And Trade Representative Jamieson Greer told CNBC this morning that the two sides have already come to agreements on a number of issues, including deals on which goods can be subject to more favorable trade terms. There are several major topics the two sides have been discussing on this trip, including AI guardrails, Taiwan and the war in the Middle East. Additionally, earlier this week, Treasury Secretary Scott Bessent announced that the US and China would be extending a trade truce that was initially struck in October of 2025 For more on the summit, we're joined by Mary Lovely, a Senior Fellow at the Peterson Institute for International Economics. Good morning.

Can you give us a little bit of background on this trade truce?

Mary Lovely (1:27)

Yeah, this happened last year where President Trump threatened to raise tariffs on China to over 100 percent, then he came down a bit. And then the Chinese who had previously passed a law that allowed them to put export controls on critical minerals and permanent magnets, said that this was at stake, and that the US needed to lower its tariffs if they wanted to have the continual flow of these critical minerals that of course are essential to many US industries.

In Busan, South Korea, last October, they reached an agreement where the tariffs on the broad-based tariffs across US imports from China would stay no more than about 20 percent, not including the tariffs that we had under the first trade war. It's a complicated area. And in exchange, China would guarantee the flow of these minerals to the US. Since that time, we have seen critical minerals flowing to the United States from China, but with a lag and not in the quantity that American industries have requested. So it remains a contentious area for the two sides.

Kimberly Adams (2:42)

Big picture. How would you describe the current economic relationship between the US and China right now?

Mary Lovely (2:48)

The economic relationship between the US and China is quite complex. On one hand, we see direct trade between the two countries falling rather quickly. On the other hand, when we look at the flow of goods through third countries, as well as the things that come here directly from China, we see very little of a change in the overall relationship and dependence of the US on China. So it remains a vital relationship for the United States.

One which is always taking place under the threat of higher tariffs.

Kimberly Adams (3:22)

Mary Lovely is a senior fellow at the Peterson Institute for International Economics. Thank you so much.

Mary Lovely (3:27)

Thank you.

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Kimberly Adams (4:53)

Earlier this month, the Spanish city of Madrid hosted a Formula 1 race for the first time in 45 years. Events of this scale require extensive planning and massive investment, but they can also have a huge impact on local business. By one estimate, the race was expected to bring in over $500 million and create almost 9,000 jobs in the local economy. The city will now host the annual race until at least 2035