Trump increases the likelihood of a negotiated US-China relationship reset

On his first day back in the White House, Donald Trump surprisingly refrained from imposing tariffs on China and did not specifically target it as a danger, which increased the likelihood of a reconciliation as both parties seek to benefit from one another rather than inflict harm on an enemy.

In a post-inauguration speech, the U.S. president claimed tariffs would make the United States “rich as hell” and left the door open for new talks with the second-largest economy in the world, but he did not bring up China, the country’s former rival in a prior trade battle.

In an unusual move, Trump proposed that the United States should own half of TikTok’s U.S. business in exchange for keeping the app alive. He also postponed the ban on the China-owned short-video app, claiming the firm might be worth hundreds of billions of dollars.

According to observers, Beijing and Washington need a fresh plan as Trump starts his second term in order to achieve their objectives and protect their interests, but unsolved concerns like the 2020 trade agreement might upset the generally friendly tone.

Trump and Chinese President Xi Jinping became close during Trump’s first term. In Beijing and Florida, the two men lavishly entertained one another. This did not, however, stem the deterioration of relations into a trade war that disrupted global supply lines and launched a series of tit-for-tat tariffs.

But with indicators pointing to the discussion table, neither party seems eager to continue where they left off.

“Trump desires a bargain. According to Alicia Garcia Herrero, head economist for the Asia Pacific at Natixis, “If not, he would have blown up China on day one.”

“He ran a campaign which was very aggressive towards China, and then on day one shied away from it.”

Because their tariffs will be restricted, China benefits. Since they will give Trump everything he needs to make a deal. Services related to finances? What about the renminbi? Do you desire a more powerful renminbi? Sure, maybe temporarily,” she continued.

In the event of another trade war, China would be even more susceptible than it was when Trump initially increased tariffs in 2018 due to its severe property problem, low domestic demand, and 16% young unemployment, among other issues.

Tuesday’s volatility in Chinese markets was a result of investors’ inability to understand Trump’s ambitions for China.

Trump and Xi decided to build a strategic communication channel on “major issues” over the phone last week.

As early as this year, the 47th president of the United States stated that he may visit China.

CHINA HAWKS

Obstacles may arise from other sources, such as Trump’s personal associates.
The president was sworn in for a second term in the White House just after Marco Rubio, a well-known China hawk, was approved as Secretary of State.

However, there may be differences in opinions toward China among other Trump cabinet officials.

In addition to having significant economic interests in China and having spent years developing strong relationships with the Chinese leadership as Tesla’s CEO, Elon Musk, who Trump named to head an advisory group aimed at improving the effectiveness of the U.S. government, may also wish to provide his opinions on China policy.

According to analysts, Trump will view himself as America’s top diplomat and will not put his faith in Rubio—who is still subject to the 2020 restrictions imposed by China—or his choice for trade representative or commerce secretary.

“In modern American history, Trump’s consolidation of authority has never been seen before. He could be the only person China can counsel practically,” said Bo Zhengyuan, a partner at the Shanghai-based consulting firm Plenum.

“But it depends how much Trump can move inside the U.S. system, because the consensus has already formed that China is the U.S.’ No.1 adversary.”

China has a chance to persuade Trump to lift export restrictions put in place by the Biden administration to limit China’s capacity in critical technology like semiconductors, according to experts, if pragmatism holds.

“Trump is a businessman at heart, his considerations are more pragmatic, and he is not interested in ideology,” Wang Dong, a professor of international affairs at Peking University has stated.

Trump’s inaugural speech did not mention the self-governing island, which Beijing claims as its own. “Other problems, like geopolitical issues, the Taiwan question, are all secondary to Trump,” he continued.

“We will see whether the U.S. will return to a more pragmatic and rational state, so that both sides can further enhance China-U.S. relations and return to the track of healthy, stable and sustainable development,” Wang added.

“If this can be done, we can even compare it to a ‘Nixon 2.0.”

In February 1972, during the height of the Cold War, former U.S. President Richard Nixon traveled to Beijing, which helped to establish official diplomatic relations and bring China back to the world scene.