As senior officials from China and the United States met in London for the first meeting of the China-US economic, trade consultation mechanism, the world's attention is not only on the outcomes of the talks but also on how the US chooses to present itself and whether it can overcome its internal contradictions.

From contradiction to clarity: America learns to realign

Over the past several years, a structural contradiction has become increasingly visible in the US trade policy. On one hand, Washington has repeatedly expressed concerns over its trade deficit, particularly during the two terms of US President Donald Trump.

On the other, it has expanded stringent restrictions on high-end technology exports, including advanced semiconductors, artificial intelligence chips, chip design software, and even aircraft engines — all areas where the US holds significant competitive advantages and where greater exports could meaningfully contribute to narrowing the trade gap.

This policy mix invites a fundamental question: does the US ultimately seek to expand its exports, or does it prioritize restricting them? It cannot do both without compromising its own strategic consistency.

Such inconsistencies are symptoms of a more fundamental challenge within the US decision-making system. America's trade policy is increasingly shaped by fragmented domestic interests that often work at cross purposes.

Export-driven industries, especially leading tech companies, have raised strong objections to US export restrictions. Nvidia CEO Jensen Huang has openly condemned the ban on H20 AI chip exports to China as "exactly wrong for America," warning that such policies will weaken the US's leadership in AI and the broader tech sector. He urged the government to reconsider these restrictions to prevent losing market share to global competitors.

However, these views clash with other interest groups that use national security concerns to push for stricter controls. The Bureau of Industry and Security under the US Department of Commerce, supported by hawkish think tanks, advocates for tough measures to block China's access to advanced semiconductor technology.

Beyond the tech sector, the US trade policy is influenced by a variety of groups with competing priorities. Labor unions seek to protect domestic manufacturing jobs, agriculture demands expanded export markets, and financial and multinational corporations prioritize stable trade conditions to maintain global supply chains. This diversity of interests has complicated Washington's efforts to develop a coherent and balanced trade strategy.

In this context, the London dialogue is more than just a platform to resolve immediate disputes. It presents the US with a critical opportunity to reevaluate its trade policy framework, particularly in high-stakes areas like advanced semiconductors and cutting-edge technologies.

For the US, establishing a stable and credible external trade stance starts with addressing internal contradictions — by clarifying strategic goals, prioritizing objectives coherently, and improving domestic policy coordination.

The rare earth reality: Course correction underway for the US

Another key aspect of the London dialogue is Washington's misjudgment of its reliance on global supply chains, especially rare earth elements, where China dominates both supply and processing.

Due to past trade confrontations, the US now faces growing challenges in securing reliable access to these vital materials essential for advanced manufacturing. Rare earth elements, critical for products ranging from consumer electronics to defense systems, have become a strategic bottleneck.

Kevin Hassett, head of the White House National Economic Council, recently emphasized this urgency: "We want the rare earths — the magnets that are crucial for cell phones and everything else — to flow just as they did before the beginning of April, and we don't want any technical details slowing that down."

Rare earths consist of 17 metallic elements found in several countries, including the US, but their extraction and refining are costly and technically complex. China controls about 90 percent of the global rare earth processing capacity, thanks to its advanced infrastructure and expertise. Other countries, including the US, have limited their own processing industries by protecting their resource deposits, slowing domestic development.

China updated its regulatory framework on rare earth exports in 2024 through the Rare Earth Management Regulations. These measures, which include supply chain traceability, anti-smuggling efforts, and export approvals, follow international norms and reflect China's sovereign right.

The regulations are grounded in the dual-use nature of rare earths, which serve both civilian and advanced military purposes. Preventing strategic resources from supporting activities that threaten international peace aligns with global non-proliferation responsibilities.

If the US engages with these regulations in a normal, compliant way, access should not be fundamentally restricted. The real challenge lies in Washington's confrontational policies, which have damaged mutual trust and limited cooperation.

While the US seeks to revive its manufacturing sector, its miscalculation of critical dependencies like rare earths highlights a disconnect between its industrial goals and the realities of global economic integration.

Modern manufacturing is inherently global, and rebuilding domestic industry requires acknowledging this interconnectedness. The US's course correction at the London dialogue signals recognition that manufacturing resilience and competitiveness depend on adapting to, not resisting, global supply chains.

Decline of US manufacturing is driven by domestic factors

The decline of US manufacturing is often linked to global value chain dynamics. However, at a deeper level, it reflects decisions made within the US itself — by American entrepreneurs, the financial sector supporting them, and the fundamental tensions between domestic capital and labor — far more than by external factors.

Blaming China for the decline of American manufacturing is a convenient but ultimately misleading narrative. Trump's claim that "China has been ripping off the United States for many years" serves more as a distraction than a genuine explanation.

The uncomfortable truth is that American business leaders have often pursued profit-driven strategies that do not prioritize American workers. At the same time, the American workforce — facing challenges such as a shortage of skilled engineers, high workplace demands, and concerns about work ethic — has struggled to fully demonstrate its value to these entrepreneurs.

The way forward for the US requires confronting these internal issues directly and implementing meaningful reforms to address systemic failures in industrial and labor policies. A critical challenge is the "skills gap," largely rooted in its education system, where high costs, unequal access, and undervalued vocational training have hindered the development of a skilled manufacturing workforce.

As the Chinese proverb says, "Self reliance is always better than relying on others." This reminds us that tackling domestic challenges may be far more effective than relying on tariffs or trade conflicts to revive manufacturing.

A step forward and the path ahead

China and the US have concluded their talks in London, reaching, in principle, a framework for implementing the consensus reached by the two heads of state during the phone call on June 5 and the consensus reached at the Geneva meeting. 

The progress made during the negotiations reflects a growing US acknowledgment of the need to correct past mistakes. This marks a step toward aligning America's industrial goals with the realities of a connected global economy and restoring stability to the world economy.

(Source: CGTN)