HONG KONG — For Donald Trump, the next big China deal is all about the last big China deal. The president’s first trade pact with Beijing, signed in 2019, did little to change Beijing’s behaviour or jump-start American manufacturing. Yet the White House is once again pushing for high-stakes negotiations, even if any agreement could prove as ephemeral as the last.
At first glance, a thaw in relations between the US and China seems a long shot. Trump’s unhappiness about Beijing’s unkept promises from his first term helps explain the president’s intense aggression towards the top US trading partner since returning to the White House. While US tariffs on Chinese goods have fallen from triple-digit levels touched in April, they still stand at 46 percent, per HSBC.
Yet the Trump administration’s policy remains unpredictable. Many in Washington agree that, beyond tariffs, foreign policy towards China is almost non-existent as hawks and doves both vie for the president’s ear, while lesser officials dare not make any moves that might contradict him. As one senior think tanker puts it, the State Department no longer has a real China desk because “Trump is his own China desk officer”.
But with virtually all $580 billion in bilateral trade between the two countries subject to levies, per the Peterson Institute for International Economics, and polls showing public approval of Trump’s economic performance near a record low, the president appears to want a deal with his counterpart Xi Jinping. People familiar with the situation say the White House has in recent months contacted chief executives at big American companies to gauge their interest in joining a delegation to Beijing later this year.
THE ROAD TO BEIJING
Policymakers and think tankers in Washington D.C. agree the most likely scenario for a meeting with Xi would involve Trump making a trip to Beijing on either side of the Asia-Pacific Economic Cooperation forum’s leadership summit, slated to gather in South Korea in late October.
However, Xi first needs to commit to a meeting. For China’s risk-averse top cadres, face-to-face negotiations between heads of state are typically conducted only after an agreement’s central tenets are ironed out. Any trip by Trump, then, would be preceded by a visit from a senior administration official like Treasury Secretary Scott Bessent or Commerce Secretary Howard Lutnick.
Beijing appears willing to wait while the economic harm to the US from tariffs mounts. Trump’s decision to extend a three-month delay to punitive levies on Chinese imports on August 12 underscored their impact on the American economy.
WHAT CHINA WANTS
Chinese leaders, faced with their own difficulties in hitting official growth targets, have good reason to want lower tariffs. Hence the visit to Washington at the end of August by trade representative Li Chenggang, who according to China’s commerce ministry met with counterparts from Treasury, Commerce and the Office of the US Trade Representative.
The People’s Republic has successfully wielded leverage over the US by controlling flows of rare earth minerals. It in turn would like to see looser US controls on sales of advanced semiconductors. Trump’s decision to allow sales of Nvidia’s NVDA.O H20 chips to China, in exchange for a 15 percent cut of revenue, suggests this is possible. A senior analyst at one think tank who has spent time discussing China policy with the president reckons “as soon as Trump gets in a room with Xi, all bets are off”.
Trump’s penchant for unpredictable dealmaking flourishes helps explain why some in Washington’s foreign policy establishment worry he could cede ground to China on Taiwan’s status. Xi has made the island a key focus of his third term, which began in 2023 with the Chinese president describing “national reunification” with Taiwan as the essence of “national rejuvenation”, the latter being his main political slogan.
Trump meanwhile is pressing Taiwan to buy more US arms as part of a commitment to greater spending on self-defence. However, if Xi persuaded his American counterpart to endorse, or simply to not oppose, “peaceful reunification”, that would be a big rhetorical win for China.
TRUMP’S MUST-HAVES
Even if Trump’s bespoke tariffs on China, announced in April, prove hard to reverse, there is scope for the two sides to reduce tension. In particular, they could agree to remove the 20 percent charge imposed on Chinese imports in January and February, ostensibly over dissatisfaction with Beijing’s efforts to halt US-bound flows of fentanyl. Officials in Washington are convinced Beijing can fully halt these shipments in the same way it controls rare earth exports.
Any deal still faces hurdles. Two people familiar with White House requirements for removing the tariffs said the administration not only demanded China eradicate flows but also publicise severe punishments for those breaching fentanyl restrictions in the People’s Daily—the Communist Party’s top propaganda outlet. The Chinese leadership might resist such a humbling request. But one foreign policy veteran suggests that Beijing could, for example, intercept a large shipment of foreign-bound fentanyl and boast about the sting without referring to US demands.
Meanwhile, China lacks some levers that other countries have used to sweeten trade talks. The European Union, Japan and Saudi Arabia have won Trump’s favour through vague promises to invest vast sums in the United States. Bipartisan opposition in Washington to Chinese investments would make a similar pledge by Beijing even less realistic. Xi could instead offer to boost imports of US crops like soybeans—but that would be less credible given China failed to boost such purchases after the last deal.
Trump’s unpredictable approach is a good reason for China to approach one-on-one negotiations with extreme caution. The president could rip up agreements after they have been signed, or imposed unrelated tariffs on China, such as those he levied on India for buying Russian oil. Chinese negotiators will also question whether whoever succeeds him in the White House will abide by any deal struck. Still, the potential benefits of a face-to-face meeting with Trump might bring Xi to the table – even if any agreement proves as short-lived as the last one.
