Speculation about a "Grand Bargain" between Trump and Xi persists, but deep divisions within Washington, Trump’s erratic leadership, and Beijing’s long-term strategic patience make a major breakthrough unlikely. Even if a meeting occurs, structural mistrust and political instability on both sides suggest any deal would be fragile at best.
Much ink has been spilled by select commentators on the prospectors for a “Grand Bargain” between the two largest economies in the world. Indeed, keen observers of Sino-U.S. relations have heralded the returnee President Donald J Trump’s “dealmaking” instincts and posited that his businessman-esque proclivities would propel him to engage in a sweeping and ambitious game of iterative negotiations with his chief rival.
Parsing the Return of Court Politics in Washington
Others have prophesised the materialisation of a Mar-a-Lago Accord – an entente that would compel the trade partners with which the U.S. has highly sizeable trade deficits, to accept a new global economic order: one where the USD would be devalued to bolster manufacturing and export competitiveness, whilst – perhaps magically – retaining its standing as the preeminent global reserve currency. The “Art of the Deal” is rooted in an almost hubristic conviction that circles can be squared through persistent bluff and bluster – which, in part, explains the administration’s heavy-handed approach in introducing skyrocketing, sweeping tariffs against most countries in the world, on April 2nd, only to announce their suspension shortly after. As for China, a drastic increase to 245% amidst a vicious all-out spat reveals Trump’s desire to shock Beijing into negotiation – a tactic that has backfired thus far.
Trump’s incoherent yet bombastic China policy has thus far been steered in rotation by a number of competing factions and individuals, each vying for the coveted post of being the ‘China whisperer’ in Trump’s inner court. In March, Senator Steve Daines visited Beijing and met with both Premier Li Qiang and Vice Premier He Lifeng, with some viewing his trip as carrying messages from the White House on trade, fentanyl trafficking, and Trump’s thoughts on China. This came a month after Treasury Secretary Scott Bessent and He Lifeng held a feisty and frosty call, in which long-standing economic and trade grievances were hashed out, in a mini-Anchorage fashion, between the two senior leaders. The meeting between U.S. Vice President JD Vance and Chinese Vice President Han Zheng at Trump’s inauguration similarly yielded minimal fruits.
Whilst Trump is keen to signal that his interpersonal bond with Xi remains potent, as evidenced by his effervescent remarks on the call conducted shortly before his inauguration, establishment hawks such as Secretary of State Marco Rubio and National Security Advisor Mike Waltz have been anxiously agitating for hardening rhetoric from Washington over issues such as the Sino-American trade relationship and the Taiwan Strait. On the other hand, freshly reeling from the Signal-gate gaffe, Waltz was unable to halt the dismissal of three senior staffers, viewed as “China hawks”, by the President – after the latter met with a far-right journalist.
Between tariffs, dismissals, leaks, flip-flops, the incumbent American administration has no shortage of entertainment value. Beijing could perhaps be forgiven for feeling fundamentally confused about the disparate, haphazard, poorly coordinated, and at times hostile signals emitted by a Washington steeped in inter-bureaucratic rivalry, as officials compete over the transient and scarce attention of their mercurial leader.
Three Key Questions That A Grand Bargain Would Likely Tackle
If there is indeed a Grand Bargain between Beijing and Washington, what would it look like? The following comprises predictions about items that both sides would likely seek to talk about; these predictions contain neither condonements of the values or presumptions embedded within how the two parties view the bilateral relationship, nor the unduly optimistic judgment that these issues can be settled thoroughly.
The first item on the agenda comprises the establishment of clear ‘endgames’ over Taiwan. Both Trump and Xi are likely to have plenty of ideas – but limited certainty and perspicuity – over what the other side ‘wants’ in relation to Taiwan, which Beijing views to be its own territory. Whilst Trump himself likely views Taiwan through the economic lenses of a substantial trade deficit and a de facto chokehold on the American semiconductor supply chain, his subordinates Rubio and Waltz might place a greater emphasis on Taiwan’s geopolitical standing within the first island chain, and as a purported symbol of American ideals in East Asian waters. Beijing would likely prefer the less politically and militarily charged, and more transactionally cynical approach exhibited by Trump – whilst advocating, for its part, a clear maintenance of the status quo over Taiwan’s political status. Both sides have an interest in setting some semblance of guardrails over the Strait, to prevent undue kinetic escalation over any prospective flare-up.
Obstacles may arise, however, when both sides are equally adamant that they must exhibit resolve and determination in face of perceived “provocation” from the other. Establishing a delicate, multi-mechanism and multi-step crisis management model is incredibly vital – but requires a level of diplomatic finesse and largesse that the present Trump administration may sorely lack. We can only hope.
The second item pertains to the attainment of some clarity on the American outlook on the global trade regime – about which, frankly, most White House aides and Republican leaders are no more in the know at present. Whilst direct trade between China and the US has declined precipitously as a share of China’s total trade since Trump’s first term, the universal “reciprocal” tariffs threatened on Tariffs Day has placed a significant dent on Chinese goods imported and re-exported by intermediaries in ASEAN and Latin America. The suspension of these tariffs for most countries – coupled with the targeting of China – points to an American strategy that is apparently focused on isolating China: though how much of it is ad hoc retrospective spin by the sturdy Bessent, remains to be seen.
Xi would likely be keen to find out if Trump is genuinely committed to his attempts at overhauling the post-Cold War international trade system, whilst Trump is eagerly looking for “quick wins” that he can justify to his base as signs of his dealmaking prowess.
There is, of course, a silver lining. Whilst much of the rhetoric angling for re-shoring of manufacturing operations to the U.S. could well be hot air given the systemic domestic labour productivity bottlenecks, Trump is likely serious in his personal desire for more Chinese capital into non-sensitive sectors in the US. How his wishes will play out given the ultra-Sino-skeptical Congress and the prevalent mood of anti-China paranoia on the Capitol Hill, remains to be seen. Technocrats in Beijing, on the other hand, have seized upon the new slew of tariffs as compelling ammunition for them to make the case for bolstering domestic consumption and shifting away from an export-led, investment-intensive growth regime, championed by more conservative voices in the senior leadership.
The third item – and perhaps one that is accorded extraordinary emphasis by the Chinese leadership – concerns the mutual acknowledgment of regime legitimacy. Beijing has long emphasised that any and all foreign attempt to instigate domestic regime change – through the demonisation and castigation of the ruling Communist Party of China (CPC) – would be seen as anathema to any degree of collaborative engagement. Whilst there are plenty of domains in which Trump and Xi can theoretically work together – e.g. tackling trans-national crime and security issues, ensuring US border security and stymying illegal immigration flows, promoting alternative medical treatments (via Robert Kennedy’s health portfolio) – these points of convergence would lead to little unless Washington explicitly acknowledges China’s “core baseline”: that the CPC is here to stay, and that the US is willing to work with, and not against, it. Given the current climate in DC, only a figure as irreverent and “unconventional” as Trump would be willing and able to vociferously push back against the entrenched ideological dogma.
The Case for Constructive Pessimism
Should a meeting between the two leaders take place, these three issues – especially the last item – will likely be touted as key axes of discussion. Whether a deal can in fact be accomplished over them, of course, is a separate matter.
I do not foresee a Grand Bargain as likely. Resolving the above questions requires a degree of commitment and consistency from both parties. Trump has limited appetite for following through on policy promises to international partners, and is known for his vacillations, erratic mood swings, and fundamentally mercurial nature. Whilst his domestic and personalistic focus will likely drive him to express yearning for a ‘Grand Bargain’, such impulses are insufficient in overcoming the structural inertia and resentment towards China that have long simmered amongst the American policy elite. It would take a man of great discipline, determination, and strategic acumen to tackle the “Blob” consensus on China.
On the other hand, Beijing perceives itself to be in a precarious position that nevertheless comes with strength in the long haul. There is a slow but steadily forming consensus amongst Chinese policy experts that Trump’s return presents an immense opportunity for China to double down on serious structural reforms aimed at redressing long-standing issues. So long as China keeps its doors open to all economies beyond the U.S., they reason, time is on the country’s side. Furthermore, senior Chinese leaders are unlikely to find reassuring the constant jostling for power amongst factions in Washington, as well as the highly provocative and offensive rhetoric adopted by select politicians over Taiwan – an issue they view to be integral to the Party’s tenability and viability. How can one bargain with those who refuse to make good upon any bargain? Hence even if a “Grand Bargain” is secured subsequent to a Trump-Xi meet – which could take place anytime over the next three months – we should not put too much hope in it.
