Chinese academic: Can the US and China really make a deal?
Even with a 90-day reprieve, it will be hard for the US and China to strike a comprehensive trade deal, says Chinese academic Wei Zongyou. It is conceivable that the US may impose tariffs to protect its advanced manufacturing sectors, while China will want the US to reduce export controls on its semiconductor industry and treat its investment in the US fairly.
After two days of intense talks in Geneva, Switzerland, China and the US issued a joint statement on their economic and trade meeting, a first since Donald J. Trump re-entered the White House in 2025. In the joint statement, China and the US agreed to slash sky-high tariffs for 90 days, with US tariffs on China falling to 30% in all, and China’s tariffs on the US falling to 10%. The two countries will also establish a mechanism to continue discussions about economic and trade relations.
This breakthrough brings a breath of fresh air to stalled relations between the world’s two largest economies and gives hope of defusing a trade war that has rocked global stock markets and disrupted supply chains.
... the trade war may take a toll on the Republicans’ mid-term election in 2026.
Why did both sides agree to talk?
Both China and the US have said they stand unafraid and that the other side has more to lose if the trade war continues. So why did the two countries eventually agree to hold direct talks? There are at least four reasons.
Firstly, the trade war has already made huge economic impacts on both sides. Since March, when the Trump administration imposed 20% tariffs on all Chinese products and threatened further measures against China and other US trading partners, the US stock market has experienced a “roller coaster” effect marked by significant uncertainty and turmoil.
Subsequently, the punitive 145% tariffs on all Chinese imports, along with China’s retaliatory tariffs of up to 125% on US imports, effectively halted trade flow between the world’s top two economies. According to a CNN report, the busiest ports in the US are experiencing a dramatic drop in cargo, with the Port of Long Beach suffering a 35-40% drop and the Port of Los Angeles a 31% drop in volume in early May. Meanwhile, the Port of Seattle reported receiving zero container ships from China.
With rising prices in commodities and materials, US small businesses and retailers are hard-pressed to make a profit, and US consumers are worried about impending inflation and even an economic recession. Many influential economists warn that the US may enter an economic recession this year, with meagre economic growth at around 1% or even a contraction.
The economic prospects for China are not bright either. According to China’s General Administration of Customs, China’s exports to the US plunged over 21% year-on-year in April, due to the punishing tariffs the Trump administration imposed on China. The World Trade Organisation’s latest forecasts paint an even darker picture: China’s exports to the US may fall by 77% in 2025.
Affected by rising tariffs and tepid domestic consumption, several US investment banks have downgraded China’s economic growth forecast to 3.5%–4%, down from last year’s 5.0% pace — even though China’s GDP had grown by 5.4% in the first quarter, before the China-US trade war fully escalated.
If the US makes substantial progress in its trade negotiations with allies and partners while excluding China from their markets, China will be isolated and cornered in an emerging new trade order centred on the US with multiple bilateral deals.
Secondly, the trade war may take a toll on the Republicans’ mid-term election in 2026. On the 2024 campaign trail, Donald Trump attacked Biden’s economic policy and rising inflation, and promised to bring household prices down and economic benefits to working-class Americans on numerous occasions. However, Trump’s universal tariffs, reciprocal tariffs and trade war have not only rocked the stock market, undermined investors’ confidence in US Treasury’s bonds and stirred up worries about an impending economic recession, but also may hit the Republicans’ mid-term election prospects next year.
Senator Ted Cruz, who is a strong supporter of Trump on many issues, warned that “tariffs are a tax on consumers, and I’m not a fan of jacking up taxes on American consumers”. And many Republican lawmakers worry that there is a good chance that Trump’s tariffs and trade war will lead to a blowback against Republicans politically in 2026.
Thirdly, there may be geostrategic ramifications. If the China-US trade war continues and China-US trade plummets dramatically, this may push China closer to Russia, putting the US in a much disadvantageous strategic position in the looming new Cold War. Moreover, closer China-Russia relations will no doubt complicate US diplomatic efforts to end the Russia-Ukraine war as soon as possible, a major campaign promise and populist foreign policy goal of keeping the US out of overseas embroilments.
For China, if the US makes substantial progress in its trade negotiations with allies and partners while excluding China from their markets, China will be isolated and cornered in an emerging new trade order centred on the US with multiple bilateral deals.
Fourthly, a prolonged trade war may have spillover effects on security issues. If the trade war continues, the Trump administration may feel bolder in its support of Taiwan by selling more advanced weaponry, forging closer military relations with Taiwan, and even giving green light to high-level official meetings between the US and Taiwan, thus substantially undermining the US’s “one China” policy and leading China-US relations into uncharted waters. On the other hand, if China’s trade is substantially cut off with the US, China may feel it has nothing to lose even if it decides to implement a more daring policy towards the Taiwan issue, thus putting China-US relations on a collision course.
From the Chinese perspective, Trump’s aggressive character and ever-changing positions and demands make it very difficult to conduct negotiations or even make concessions to reach a deal.
Difficulties ahead
The Geneva trade negotiation is an important first step to de-escalate the tense trade relations between China and the US, and gave a reprieve of the internecine trade war. Nevertheless, there are still steep mountains to climb and wide oceans to cross in the upcoming three months, given the lack of trust, stringent demands and huge tasks ahead.
Firstly, the lack of trust between China and the US. From the Chinese perspective, Trump’s aggressive character and ever-changing positions and demands make it very difficult to conduct negotiations or even make concessions to reach a deal.
China worries that if it makes some concessions to facilitate the negotiations, it will be viewed by the Trump administration as weak and lead to further unreasonable demands and even blackmail. Besides, many Chinese believe that the real purpose of the Trump administration’s trade war is not to rebalance China-US economic relations or reach a deal, but to decouple the bilateral economic relations, thus thwarting China’s rise. From the US perspective, China is not interested in good-faith negotiations with the US and substantially rebalancing bilateral economic relations.
Secondly, multiple and stringent demands from the US. The Trump administration has basically made three different kinds of demands to China in this trade war. The first is to substantially rebalance China-US trade relations, by exporting less to the US while buying more US goods. The second is to strictly curb the fentanyl flow to the US by harshly cracking down on the illegal selling of fentanyl precursors to Mexico or the US and more closely cooperating with US law enforcers. The third is to stop governmental subsidies to its strategic sectors as embodied in China’s industrial plans, such as Made in China 2025.
Besides, the US has also long complained about China’s intellectual property theft, forced technology transfer as well as tariff and non-tariff barriers to US exports to China. Those multiple demands, and especially the Trump administration’s efforts to block China’s technical leap forward in critical and emerging technology and bring manufacturing jobs back to the US, will be great stumbling blocks to future China-US trade negotiations.
It is hard to imagine that both sides can reach a comprehensive trade agreement settling all the above-mentioned issues within three months.
Third, technical issues. Given the huge tasks ahead, time is very tight for both sides to work out a mutual satisfactory agreement within the three-month reprieve. It took more than a year for China and the US to reach a preliminary phase one trade agreement during the first Trump administration which saw various ups and downs and stops and starts. It is hard to imagine that both sides can reach a comprehensive trade agreement settling all the above-mentioned issues within three months.
Can China and the US reach a deal?
Tht said, despite all the difficulties mentioned above, there is still optimism that China and the US can reach some kind of trade agreement in the upcoming months, even though short of a comprehensive one.
Firstly, despite the lack of trust, both sides have shown a strong willingness to de-escalate the trade tension and find a way out. Even in the heat of the punitive trade war and retaliation, China has made it clear that it does not want to engage in a trade war, and if the US is really willing to talk, the door is open. Trump also said multiple times that he is open to trade talks and hopes to reach a deal with China.
The tariffs on China’s strategic sectors and China’s exports to and imports from the US will be the focus and real test of future talks.
Secondly, the simultaneous reduction of 91% of the reciprocal and retaliation tariffs by both sides signals the seriousness and willingness of both sides to conduct negotiations in good faith in the future. The removal of punishing bilateral tariffs and the establishment of negotiation teams have given a much-needed stimulus to stalled trade relations and trade talks. Both sides now have a stake in making future talks a success.
Thirdly, the tariffs on China’s strategic sectors and China’s exports to and imports from the US will be the focus and real test of future talks. It can be reasonably inferred that China is willing to go an extra mile to crack down the illegal fentanyl smuggling, and the remaining 20% tariffs concerning fentanyl may soon be dropped, which will bring the tariffs down to the 10% baseline universal tariffs. But the Trump administration will likely pressure China to buy a large volume of US products and greatly reduce the bilateral trade imbalance.
Meanwhile, the Trump administration will focus on China’s strategic sectors and may impose tariffs from, say, 15% to even 100% to protect the US’s advanced manufacturing sectors and prevent China’s technology leap forward, and this may prove an obstacle to a comprehensive trade deal. Besides, China will also request the US to reduce export controls against China’s semiconductor industry and treat China’s investments in the US fairly, which will add to the difficulties of reaching an agreement.
All in all, there is a growing possibility that China and the US can reach some kind of trade deal in the coming months, but it may be short of a comprehensive one.
