China Briefing | Ignore the bravado, a US-China trade deal is still possible. But it’ll take a Xi-Trump one-on-one

Doom and gloom are clouding the China-United States trade relationship once more. Until two weeks ago, both Beijing and Washington had been saying a trade deal was within reach after 10 rounds of intense negotiations since the temporary truce agreed by the Chinese President Xi Jinping and his counterpart Donald Trump in December.

But Washington and Beijing are now at it again, raising tariffs on each other after Trump accused China of reneging on its commitments. The US hiked import duties on US$200 billion of Chinese goods and Beijing responded with higher tariffs on US$60 billion of American products. Then, in retaliation against China’s retaliation, the Trump administration said it was preparing to slap higher tariffs over the rest of Chinese imports, valued at more than US$300 billion.

While the global equity markets were rattled, both Beijing and Washington put on brave faces. Typical of Trump’s wilful unpredictability, he first said he was in “absolutely no rush” to make a deal with China but a few days later said a deal would “happen, and much faster than people think!”.

Pessimism is growing that the trade war could take a prolonged turn, inflicting serious damage not only the world’s two biggest economies but also dragging down the rest of the world.

The next window of opportunity is late June in Japan, where Xi and Trump are scheduled to meet at a G20 summit.