China’s hopes grow for an agreement to stop the trade war with Donald Trump

Chinese officials were prepared for Donald Trump to deliver bad news upon his return to the US presidency: immediate 60 percent tariffs on foreign goods that could cause a devastating blow to the Chinese economy. second largest in the world.

Instead, they got a clear break this week. Trump has ordered an investigation US-China tradeand later repeated the threat of a 10 percent tax related to the deadly opioid fentanyl.

These measures paled in comparison 25 percent of published fees to US allies in Mexico and Canada, and the worst projections of policymakers in Beijing.

The new president also suggested to the greatest possible connection ownership fees for TikTok, the Chinese-controlled short-form video platform that US security courts want to shut down.

Despite Trump’s tendency for vague statements and quick changes, these first steps have revived hope in Beijing that negotiations can prevent a second trade war. Now, the question is what kind of agreement can be accepted by both sides.

“There is a possibility that the two sides can reach an agreement – you can sense that there is cautious optimism,” said Zhao Minghao, a professor at the Institute of International Studies at Fudan University in Shanghai. “But we will need to see if there is a good match between what Trump and Beijing can offer.”

Trump’s easier-than-expected opening to China followed some positive signs in recent days. Chinese President Xi Jinping sent the highest-ranking official ever to a US inauguration, Vice President Han Zhengwho also met with US business leaders including Trump supporter Elon Musk.

Xi and Trump too pick up the phone the weekend before the inauguration, the first in four years, which the president of the United States described as “very good” and covered “Trade, Fentanyl, TikTok, and other topics many”.

During his campaign, Trump had vowed to hit China with 60 percent tariffs, first which threatens an additional 10 percent on the first day of his presidency to force Beijing to reduce the flow of the drug priority for fentanyl.

Instead, on Monday he issued a memo ordering officials to investigate the US trade deficit and “recommend appropriate measures, such as global tariffs or other policies, to correct such deficits”.

He also asked the US Trade Representative to study the Beijing agreement and the “first step” agreement agreed upon during his first term as president, and to consider additional tariffs “especially in relation to and industrial supply chains and avoiding third countries” – a possible step. more impact than China.

Economists believe that part of China’s trade with the US has been diverted to third countries to avoid tariffs since the trade war of the first Trump administration. US officials are due to report their findings on April 1.

Although Trump signed an order allowing TikTok to operate for 75 days – a change from his first term, where he had sought to ban it from the US – he also said Beijing would need to allow the American company to take over half a company or face. fees up to 100 percent.

A fee arrangement with TikTok owners followed quixotic words on Monday by Musk, who complained that while the former was allowed to operate in the US, his X website was blocked in China.

One person familiar with the matter in China said Beijing might agree with TikTok owner ByteDance to sell the platform as part of a broader deal that would deal with a number of issues involving business. However, any such discussions were still early days, the person said.

Chinese officials, who have long opposed the forced sale of TikTok and will need to accept it, in recent days have appeared to show an alternative approach.

“When it comes to actions such as operations and acquisitions, we believe that they should be decided independently by companies in accordance with market principles,” the Ministry of Foreign Affairs said on Tuesday, of adding that “the laws and regulations of China must be observed”.

Gabriel Wildau, managing director of the consulting firm Teneo, wrote in an analyst note that Chinese leaders can “believe that a peaceful solution to the TikTok issue can lay the foundation for cooperation” on other issues.

“These could include tariffs, foreign controls, and — in a dream scenario for Beijing — even US policy toward Taiwan and the South China Sea,” Wildau said.

However, economists warned that it was too early to be optimistic that trade conflicts could be avoided. While Trump sounded more open to dealing, his administration was full of Chinese falconsthey said.

“Now it’s a holding pattern,” said Fred Neumann, chief Asia economist at HSBC. “It is encouraging that we did not see an increase in the current rates and that there is probably room for negotiation beforehand. But I think it would be a wrong conclusion to say that China is completely gone. ”

Besides trade, Beijing could offer Trump help on other issues, such as resolving the conflict in Ukraine, said Wang Chong, a foreign policy expert at Zhejiang University of International Studies.

However, Wang warned that Beijing was ready if relations were to deteriorate. Even if the US starts with a small increase in tariffs, it could undermine investor confidence in China. “If tariffs are imposed, China should fight back,” Wang said