After months of stalemate between Chinese and U.S. trade negotiators, President Donald Trump returned from the G20 summit in Osaka over the weekend, triumphant that he’s managed to secure a meeting on the sidelines with China’s President Xi Jinping.
In fact, by Monday, the president was giving the impression that the ball is already rolling on those talks that have seen billions of dollars in tariffs slapped on U.S. exports and Chinese imports.
This has caused major strife for American farmers seeing their crops pile up unsold, and anxiety for importers who know they will have to raise prices for consumers that might snap their purses shut for the duration.
“They’re speaking very much on the phone but they’re also meeting. Yeah, it’s essentially already begun,” Trump told reporters on Monday. “It actually began before our meeting.”
He added that a deal would have to “be better for us than for them because they had such a big advantage for so many years.”
It seems unlikely that China would in fact agree to a deal that would give it a disadvantage — if it were prone to making such a deal, we wouldn’t be where we are now: A year into a trade war with China having only deepened the country’s resolve to not give in.
Furthermore, whether China and the U.S. have already started talking, there is no schedule for actual meetings, no timelines for achievable milestones, and no offramp for how negotiators from both countries will close the gaps that seem to transcend trade issues.
“Because what now bedevils the US and China is far more than a simple trade war, I do not foresee the semblance of a settlement of the tariff issue as a meaningful remedy for what ails,” said Orville Schell, the head of the Asia Society’s Center on US-China Relations.
“The two countries are now in increasingly adversarial conflict over in too many other areas as well,” he added, answering questions via e-mail: Trade deficit, an uneven investment playing field, and forced transfer of technology are just the beginning.
Schell lists other serious issues: “Major theft of designs for new defense systems, disagreement about the [Communist] Party’s refusal to grant ten year multiple-entry visas — especially in the fields of the media, academia, religion and civil society — and disagreements over our very different values and political systems.”
A “very limited agreement to not further escalate, but not a major breakthrough,” is how Scott Kennedy, director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies, put it.
“As long as the U.S. is going at this alone, with very limited cooperation from others, we’re not going to force China to make a clear choice, between maintaining its state socialist system and having an amicable relationship with the West.”
“Both sides played for more time, and both sides can declare domestically, that they have achieved some progress and not given up anything. But this doesn’t bring us closer to a deal,” said Kennedy.
For China, the longer the trade war drags on, the more it sees its brand of socialism as superior to “liberal democracies with fully marketized economies,” said Schell.
“The conflict between [the U.S. and China] has become so wide, and the promise of ‘engagement’ as a policy of slow convergence so lacking in credibility, that it is difficult to see how the two nations will get back on a truly stable basis any time soon.”
Kennedy, too, sees the yawning gap between the two sides as unbridgeable unless “the Trump administration really lowers his demands. But I just don’t see that coming.”
The only way that could happen, Kennedy figures, is if the U.S. economy really takes a nosedive in the coming year or so, and the voters the president is relying on in key 2020 states start to reevaluate their loyalty to him.
President Trump has been known to back off from the threats he’s issued in the past in an effort to protect those voters — for instance, the tariffs he was threatening on Mexico would hit red states the hardest.
If President Trump wants a deal, said Kennedy, neither relenting (as he seems to have on Huawei, allowing the Chinese telecom to purchase U.S. parts) nor continuing to maximize unilateral pressure via tariffs, as he has done, will do the trick.
“The missing ingredient is collaboration with friends and allies, and having China face a united front,” said Kennedy.
But there is little to indicate that President Trump will start favoring a multilateral approach to this issue. If anything, he went in the opposite direction on Monday when he threatened $4 billion in new tariffs on 89 European products.
The president imposed steel and aluminum tariffs on the European Union (as well as virtually all other major trading partners) and has upped the ante over subsidies given to Airbus, the European rival to Boeing, a U.S. aircraft manufacturer. The Europeans have also slapped tariffs on U.S. goods, and the dispute will be mediated by the World Trade Organization, likely in the fall.
In other words, so much for that united front.
“As long as the U.S. is going at this alone, with very limited cooperation from others, we’re not going to force China to make a clear choice, between maintaining its state socialist system and having an amicable relationship with the West,” said Kennedy.
For President Trump, it’s a matter of being reelected. For China, it might be a matter of waiting for the next administration, hoping for a president who has a greater stake in the international system, as well as maintaining U.S.-China relations.
For the moment, the two nations are locked in a holding pattern.
“For those who want something different, I’m afraid it’s unlikely — we’re just going to keep going through this drama again and again. The politics of this don’t lend themselves to a solution,” said Kennedy.