The U.S.-China Trade Deal Risks Falling Victim to Spiraling Ties



Colum Murphy and Enda Curryn | Bloomberg

As U.S.-China ties have deteriorated since the Covid-19 pandemic devastated the globe, the trade deal they signed in January has served as sort of a linchpin in the relationship. Now that also could be coming undone.

President Donald Trump, who has repeatedly blamed China for the virus’s spread ahead of the U.S. election in November, said Thursday the phase-one trade deal “means less to me now than when I made it.” He spoke shortly after the U.S. shut down China’s consulate in Houston for spying and theft of intellectual property, which prompted Beijing to retaliate Friday by ordering American diplomats to abandon their Chengdu outpost.

“The phase-one trade deal between the U.S. and China hangs by a thread,” said Eswar Prasad, who once led the International Monetary Fund’s China team, and is now at Cornell University. “China has an incentive to keep the trade deal with the U.S. from crumbling, even as the bilateral relationship becomes more toxic, in order to try and limit damage to its economic recovery.”

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