1 year after Mar-a-Lago summit, US-China ties on tenterhooks

President Donald Trump first tried to disarm Chinese President Xi Jinping at Mar-a-Lago with smooth talk and hospitality. A year later, he’s resorted to hardball and found that Xi is willing to throw it back.
But at least for now, acrimony over trade is unlikely to spill over into sensitive national security issues, former U.S. officials and China experts say.
China has no interest in escalating the dispute over tariffs and wants to reach a trade compromise with the U.S., they say. There’s also plenty of opposition to tariffs from the U.S. side, including from Trump’s supporters. They include U.S. companies that have applauded his slashing of corporate tax rates and Republican lawmakers representing farmers who would be hurt by tariffs on U.S. agricultural products.
“What we are seeing so far, although it’s ugly and it’s confrontational, it’s still posturing,” said Yun Sun, China expert at the Stimson Center think tank, after China responded Wednesday to U.S. plans for $50 billion in tariffs on Chinese imports with its own plan to tax $50 billion of U.S products. “We have not yet seen the ax falling.”
On Thursday, Trump said he had instructed the U.S. trade representative to consider slapping $100 billion in additional tariffs on Chinese goods.
The threat of trade wars between the two world powers has nevertheless roiled global markets and deepened mistrust between the two governments. In recent months, Washington has adopted an increasingly adversarial stance toward Beijing. That trend could be intensified as Trump replaces moderates in his administration with hawks such as incoming national security adviser John Bolton, who has advocated a tougher approach toward China.
“The relationship is spiraling downwards, and the risk of a miscalculation or accident is only increasing,” wrote Elizabeth Economy, director for Asia studies at the Council on Foreign Relations.
Both sides make much of the personal rapport forged between Trump and Xi when they met at his Florida resort last April 6-7. Trump sought Xi’s help on North Korea and in narrowing the hulking U.S. trade deficit with China that he had railed against repeatedly during his election campaign.
China has cooperated to an unexpected degree on North Korea by agreeing to and applying international sanctions to punish its wayward ally for developing nuclear weapons. Trump has often praised Xi for that — rhetoric that is welcomed in China’s authoritarian political system, where great importance is vested in leadership ties.
On other fronts, and not just trade, the atmospherics between the U.S. and China are getting worse.
In December, the Trump administration adopted a national security strategy that identified China, along with Russia, as a “revisionist power” intent on challenging American interests. The U.S. has ruffled Beijing’s feathers by stepping up the tempo of naval operations in the South China Sea. And Trump signed legislation last month that calls for Cabinet-level official visits to Taiwan, a self-governing island that Beijing regards as part of Chinese territory.
Doug Paal, who handled Asian affairs at the White House under the Republican administrations of Ronald Reagan and George H. W. Bush, said China views this as a gambit by Trump to exact concessions on trade. He said it hasn’t undermined China’s belief that Trump, who has avoided criticizing China on human rights, is someone they can work with.
“He uses tough tactics, but in the end, he wants to get to a deal, and they are willing to make a deal with him,” Paal said.
But Daniel Russel, who was President Barack Obama’s point man on Asia, said Trump’s trade gambit was playing into the Chinese perception of the U.S. as a malevolent rival bent on containing China’s rise as a world power.
“The Chinese know how to play this game and have had abundant time to prepare a counterstrike strategy. It includes grabbing the moral high ground and getting other countries to look at China as a victim, not the offender, and as the defender of the international trading system,” he said. “It is a ridiculous turn of events.”
Under Obama, the U.S. exacted an agreement from China that reduced — but did not halt — cybertheft of U.S. commercial secrets. The U.S failed to narrow the trade deficit with China, which hit a record $337.2 billion last year.
“We chose not to blow up the relationship,” said Russel, now at the New York-based Asia Society Policy Institute. “We chose not to put the global economy at risk through some sort of suicide-vest type of challenge.”
Compromise on the trade dispute remains possible. The U.S. tariffs won’t take effect for about two months, and China says it is waiting to see what Washington does. But the differences go beyond the level of import taxes: It’s also about ascendancy in the high-technology economy, where China seeks global leadership in electric cars, robotics and other fields.
“These are the kinds of things that if they grab the industries of the future, we won’t have a future,” Peter Navarro, a key White House trade adviser and arch China critic, told CNN.
Yun, the China expert, said China will be reluctant to make concessions that hurt its tech industry development plan, “Made in China 2025,” so differences over intellectual property and U.S. market access won’t be easy to resolve.
“Trump has made clear he wants to strike deals, but the bar is so high that the Chinese don’t know whether they can meet it,” she said.
 President Donald Trump has instructed the U.S. trade representative to consider slapping an additional $100 billion in tariffs on Chinese goods in a dramatic escalation of the trade dispute between the two countries.
Trump’s surprise move Thursday came a day after Beijing announced plans to tax $50 billion in American products, including soybeans and small aircraft, in response to a U.S. move this week to slap tariffs on $50 billion in Chinese imports.
And it intensified what was already shaping up to be the biggest trade battle since World War II. Global financial markets had fallen sharply as the world’s two biggest economies squared off over Beijing’s aggressive trade tactics. But they had calmed down Wednesday and Thursday on hopes the U.S. and China would find a diplomatic solution.
Instead, the White House announced after the markets closed Thursday that Trump had instructed the Office of the United States Trade Representative to consider whether $100 billion of additional tariffs would be appropriate and, if so, to identify which products they should apply to. He’s also instructed his secretary of agriculture “to implement a plan to protect our farmers and agricultural interests.”
“China’s illicit trade practices — ignored for years by Washington — have destroyed thousands of American factories and millions of American jobs,” Trump said in a statement announcing the decision.
The latest escalation comes after the U.S. on Tuesday said it would impose 25 percent duties on $50 billion of imports from China, and China quickly retaliated by listing $50 billion of products that it could hit with its own 25 percent tariffs. The Chinese list Wednesday included soybeans, the biggest U.S. export to China, and aircraft up to 45 tons (41 metric tons) in weight. Also on the list were American beef, whiskey, passenger vehicles and industrial chemicals.
Earlier in the week, Beijing announced separate import duties on $3 billion of U.S. goods in response to the Trump administration’s duties on all steel and aluminum imports, including from China.
U.S. officials have sought to downplay the threat of a broader trade dispute, saying a negotiated outcome is still possible. But economists warn that the tit-for-tat moves bear the hallmarks of a classic trade rift that could escalate. And already, tensions between the world’s two biggest economies have rattled global stock markets.
U.S. Trade Representative Robert Lighthizer called China’s move “unjustified” and said Trump’s proposal was an “appropriate response to China’s recent threat of new tariffs.”
“Such measures would undoubtedly cause further harm to American workers, farmers, and businesses,” he said in a statement. “Under these circumstances, the President is right to ask for additional appropriate action to obtain the elimination of the unfair acts, policies, and practices identified in USTR’s report.”
The clash reflects the tension between Trump’s promises to narrow a U.S. trade deficit with China that stood at $375.2 billion in goods last year and China’s ruling Communist Party’s development ambitions. Trump says China’s trade practices have caused American factories to close and lead to the loss of American jobs.
Trump’s top economic adviser, Larry Kudlow, said earlier Thursday in an interview with Fox Business Network that negotiations were ongoing. But, he said, “at the end of the day, China’s unfair and illegal trading actions are damaging to economic growth, for the U.S., for China and for the rest of the world.”
He also called Trump “the first guy with a backbone in decades ... to actually go after it. Not just whisper it, but to go after it with at least preliminary actions.”
One trade policy expert said he doubted that Trump’s rhetoric would help forge any deal with China.
“Mr. Trump is upping the ante, but the lack of a clear game plan and an incoherent messaging strategy from the administration is setting this up for an all-out trade war rather than a fruitful negotiation,” said Eswar Prasad, professor of trade policy at Cornell University.
Sen. Ben Sasse, R-Neb., a frequent Trump critic, called the escalation “the dumbest possible way” to punish China.
“Hopefully the President is just blowing off steam again but, if he’s even half-serious, this is nuts,” Sasse said in a statement. “Let’s absolutely take on Chinese bad behavior, but with a plan that punishes them instead of us.”
Any additional tariffs would be subject to a public comment process and would not go into effect until that process is complete.