Managing the Fallout of the US-China Trade War

10/31/2019

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Yun Sun | The Stimson Center

Topline

Since the beginning of the tariff war in mid- 2018, the escalation of the trade tension is widely expected to continue into the 2020 presidential election season. While President Trump’s team may still believe that a trade deal is well within reach in the near future, that perception is not at all shared by the Chinese government. The U.S. and China have entered a war of attrition. The U.S. policy¬≠ makers need to prepare for a long game in the trade tension and the eventual de-coupling of the two economies, regardless of whether that was the original intention.

The Problem

As the trade war escalates to where it is today, the two negotiation teams have exhaustively discussed the issues of divergence. The 90% of the deal that had been reached by May 2019 represented what the two sides could realistically agree on and the rest 10% most likely will remain unresolved despite more efforts. Quantitatively they might appear minor, yet qualitatively they represent the most difficult disagreements that neither side is at the liberty to make a compromise.

Managing the Fallout of the US-China Trade War _ Stimson Center

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