US-China trade deal would be tricky and tenuous

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Donald Trump and Xi Jinping have an interest coming to the negotiating table. The U.S. president’s 145% additional tariff on many Chinese goods, and his counterpart in Beijing’s corresponding 125% charge, are unsustainable. The problem is that their last deal did not work, while Washington sees China and its technological ambitions as a growing national security threat. That will make a pact between the world’s two largest economies hard to negotiate and even harder to uphold.Trump has expressed optimism that he can reach an arrangement with China that would “substantially” cut levies. On Wednesday, a source familiar with the situation told Reuters any action by the White House would not be made unilaterally. Last week, Xi Jinping appointed a new trade negotiator, underscoring Beijing's willingness to de-escalate tensions over the pair’s nearly $600 billion of bilateral trade. Yet any deal they produce will deserve ample scepticism. After all, a relatively narrow so-called "Phase One" agreement in January 2020, supposed to defuse Trump’s first trade war, did not work.That arrangement, detailed in a , took a year and half to negotiate and, while pausing further tariff hikes, provided no path for removing those already in place. China also failed to keep its promise to buy no less than $200 billion of additional American goods and services each year.That makes the 2020 deal a poor template for resolving the current standoff, which includes everything from China's role in the supply chain of fentanyl, an opioid widely abused in the United States, to the future of viral video app TikTok’s U.S. business.A second problem with striking a meaningful deal to avert a global economic shock is the sheer size of the U.S. deficit with China. Goods imports directly from the People’s Republic were nearly a fifth lower last year than in 2018, when Trump launched his first tariff assault. But after including indirect trade passed through third countries, the United States may be taking more Chinese goods now than it did back then.The gradual of the Sino-American relationship has shrunk China’s direct share of U.S. imports by 8 percentage points to 13% between 2017 and 2024, according to the U.S. Census Bureau. Yet Asia's total U.S. imports rose by more than a fifth to $1.3 trillion. China's share of global exports also grew. This suggests many companies have been re-routin...

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