The US and China need to talk

The United States and China are caught in an escalating trade war that could gravely damage their economies and even threaten global stability. Since US President Donald Trump’s declaration on April 2 of “reciprocal” tariffs on almost all US trading partners, the two countries have imposed triple-digit duties on each other – levels that have effectively created a mutual trade embargo.

Container bookings from China to the US have already fallen by 60%, and orders for all kinds of Chinese products have been cancelled. When the effects of this slowdown hit the US in a matter of weeks, not only will consumers find it difficult to buy Chinese-made goods, so will many US businesses, which sell these imports or use them as inputs. Given that such items are not going to be produced in the US or sourced from other countries any time soon, many businesses will have difficulty coping.

The Trump administration has apparently realised the gravity of the impending crisis. On April 22, Treasury Secretary Scott Bessent called the US-China trade war “unsustainable,” and an unnamed source said that the White House would consider lowering tariffs on China. Other officials swiftly walked back these comments, saying that the US would not act “unilaterally.”

Normally, such a situation would be ripe for negotiation. Instead, the two sides seem unable or unwilling to talk. Trump has repeatedly indicated that he wants to speak with Chinese President Xi Jinping about the tariffs, and has even claimed that Xi called him a few weeks ago – a claim that China denies. According to most accounts, the two leaders have not spoken since Trump’s inauguration in January. And despite Trump’s recent comment that negotiations are happening every day, a Chinese government spokesperson said on April 24 that there are currently no trade talks between the countries.

Given the urgency of the situation, what is standing in the way of negotiations between the US and China? The first barrier was Trump’s insistence on imposing additional duties ahead of trade talks. Chinese authorities seemed willing to engage early, sending Vice President Han Zheng to Trump’s inauguration. But Trump quickly levied two rounds of 10% tariffs on China, which went into effect in early February and early March, wrecking any chance of de-escalation.

Recall that China was already subject to the tariffs and sanctions Trump levied in his first term, which were later expanded by his successor, Joe Biden. Perhaps Trump believed that ramping up the pressure would build leverage for an eventual “China deal” – indeed, he adopted a similarly aggressive approach to other partners with his reciprocal tariff threats, and claimed that many countries were “kissing [his] ass” to negotiate their rates. But the Chinese saw it, not unreasonably, as extortion.

A second problem is that the Chinese government and the Trump administration take wildly different approaches to diplomatic engagement. The Chinese bureaucracy is conservative and bound by protocol, whereas Trump likes to call his counterparts and negotiate personally. This is not how Chinese leaders – or most other leaders – work. In fact, no Chinese leader has ever initiated a phone call to a US president. The Chinese side should address this problem. But given how Trump has treated other world leaders, no one would recommend changing course now. Rather than risk humiliation, Xi will probably meet Trump only after lower-level officials from both sides have agreed on outcomes, as is normal diplomatic practice.

Other institutional asymmetries also weigh on bilateral relations. In China, the premier and vice premiers are responsible for certain aspects of the economy and government – roles that do not correspond neatly to US cabinet secretaries. Since changing these systems is out of the question in the short term, officials should negotiate with their designated counterpart, while also meeting with more senior officials to ensure that messages are getting through. For this reason, previous US administrations created mechanisms to convene US agency heads and Chinese vice premiers for regular dialogues. But these forums were deemed inefficient and subsequently scrapped.

The Chinese have asked the Trump administration to pick a point person with whom they can negotiate. The counterpart for such trade talks would normally be the US Trade Representative, as it was in Trump’s first term. But this time around, the US agenda for trade with China is so muddled, and the stated goals so wide-ranging – from rebalancing global trade to stopping the flow of fentanyl, reindustrialising America, and generating revenue – that the USTR would be out of his depth.

This confusion is the biggest hurdle to US-China trade talks. Does the administration want to raise revenue, restore US manufacturing, create jobs, address global imbalances, bring down US debt, bolster security, slow China’s rise, or some combination of these?

Perhaps the more fundamental question is whether Trump wants a deal or decoupling. If it’s the latter, there is no good reason for China to negotiate. But if it’s the former, Trump should say clearly what he wants, and the two sides should start talking in earnest. A de facto embargo on bilateral trade will devastate both economies, and officials should do all they can to salvage the situation. The current standoff ultimately benefits no one.

Susan Thornton, a former acting US assistant secretary of state for East Asian and Pacific affairs, is a senior fellow at Yale Law School’s Paul Tsai China Center.