No US-China trade deal any time soon unless two key obstacles are overcome
- The disconnect between Trump and Xi and their negotiators means the groundwork laid in the trade talks may be negated when the leaders weigh in
- Hardening political stances in the US and China also provide impetus for a continuing stalemate
Washington and Beijing have different versions of what led to the stalemate. The US story was straightforward: China backtracked on its previous commitments and tried to renegotiate the deal. But this narrative lacked detail about what exactly China had tried to renege on.
First, there were differences on how to deal with the existing tariffs once a deal is struck. Beijing preferred to have all of them removed, while the US wanted to keep them in place to reinforce Beijing’s compliance with the agreement.
Second, the two sides disagreed on the size of additional purchases from China. It had earlier been reported that the US demanded that China buy an additional US$1.2 trillion of US goods over the next six years, working out to about US$200 billion a year. To put that into context, China’s total annual imports from the US were only US$155 billion per year for the past two years.