On March 31, U.S. President Donald Trump signed two executive orders to review the reasons why United States has trade deficits with some of its trading partners. The U.S.-China trade deficit is certainly an important topic of the review.

At a press conference on March 30, Chinese spokesperson Lu Kang announced that Chinese President Xi Jinping would visit U.S. President Donald Trump at his Mar-a-Lago property in Florida from April 6-7.

Could Trump like Richard Nixon “echo like thunder” by unilaterally announcing a high tariff regime to balance U.S. trade deficit and break the WTO system? While some of Trump’s advisors would wave their heads affirmatively, the institutional and commercial leverage of the U.S today is much inferior from Nixon’s America that bended Europeans to follow her unilateral demands.

In a February 24th speech, U.S. President Trump made his strategy for trade policy clear. The U.S. will negotiate bilateral, rather than regional or multilateral agreements, and favor U.S. producers rather than market forces. Trump’s approach to trade policy means radical change for the world’s longtime leader of efforts to reduce global trade barriers with trade agreements.

Both economies have too much to lose by putting up trade barriers, thanks to their intricately connected markets. China and the US should build common understanding through communication at various levels and find more points of converging interests so as to avoid risks and strengthen cooperation.

Since the 2008 global financial crisis, no linkages have been found between the changes in US trade deficits and exchange rates. Chinese exports have grown when global market conditions improve, even in years when the RMB was strong against the dollar.

President Trump, in clinging to this narrative, promises to fight a war long past with weapons that are likely to hurt his allies as much as his supposed enemy. Hardly a vision of America being made great again.

Apart from various niches of the political and academic intelligentsia, America’s relationship with China is one that continues to be largely and mutually beneficial but misunderstood, and one that is generally swept under the carpet in favor of America’s Euro-centric view of the world.

A more nuanced approach that includes additional perspectives shows that the true U.S. deficit may be as low as US$132.7 billion.

While the outcome is uncertain, it is clear that Trump’s attempt to shake up current bilateral relations between the two superpowers will be a key theme for 2017 globally. We expect that China will take a wait-and-see approach, especially in front of the 19th National Congress of the CPC later this year. However, as the U.S. shies away from multilateral or regional trade agreements, such as TPP, China will quickly fill the space.