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The US and China relationship is in shambles. It could get worse at the G20.

Trump and Xi Jinping could fix parts of the US-China relationship in Argentina. They won’t.

The Hong Kong based CSCL East China Sea container ship sits in a berth at the Port of Oakland on June 20, 2018 in Oakland, California.
A Hong Kong-based container ship sits in a berth at the Port of Oakland on June 20, 2018.
Justin Sullivan/Getty Images

President Donald Trump will meet Chinese President Xi Jinping for a working dinner during the G20 summit on Saturday, and it looks like it will be a missed chance to improve souring relations between the world’s top two economic powers.

Both leaders will surely discuss their ongoing trade war; the US placed around $250 billion in tariffs on Chinese goods, to which Beijing has responded in kind. Neither side has yet reached a compromise to defuse tensions, with the US repeatedly pulling away from potential deals in hopes that China caves to its demands.

The Trump administration expressed confidence ahead of the meeting. “There’s a good possibility we can make a deal,” Larry Kudlow, Trump’s top economic adviser, told reporters on Tuesday, adding that “things have been moving very slowly between the two countries.” National Security Adviser John Bolton noted Trump and Xi have a good relationship, but said each would firmly represent their country’s interests in Argentina.

Experts warn the meeting will likely prove fruitless, however. “I expect both leaders to say some nice words about the importance of bilateral ties, but not solve anything,” Bonnie Glaser, a China expert at the Center for Strategic and International Studies think tank in Washington, said.

Both Trump and Xi may then leave the summit with their countries still locked in a tense standoff that some say has led to the worst US-China relationship in decades. The problem is at this point only those two leaders have the power to improve ties.

If Trump and Xi can’t put their countries on a friendlier path, then the world’s most important economic relationship will only get worse.

There likely won’t be a deal to end the trade war

In an interview with the Wall Street Journal on Monday, Trump threatened to increase tariff rates on Chinese goods from 10 percent to 25 percent. Experts say that threat is likely a tactic to increase his position ahead of talks with Xi.

That play probably won’t work, and may actually lead to more penalties on China down the line.

US President Donald Trump and Chinese President Xi Jinping in November 2017 in Beijing.
President Donald Trump and China’s President Xi Jinping arrive at a state dinner on November 9, 2017 in Beijing.
Thomas Peter/Pool/Getty Images

“I would be surprised if they agree on a tariff ceasefire since Trump views the tariffs as a source of leverage,” says Glaser. “So maybe the outcome will appear positive for a short period, and then Trump will say he is dissatisfied with China’s offer and announce more tariffs.”

But even if they do reach an agreement, it likely won’t last — mostly because of Beijing, says Abigail Grace, a China expert and former member of Trump’s National Security Council.

“The root of US-China economic tensions is structural and remains the Chinese Communist Party’s fundamental opposition to free-market capitalism and fair competition,” says Grace, now at the Center for a New American Security think tank in Washington. “That can’t be fixed overnight.”

Trump noted in the Journal interview that he could still impose tariffs on the remaining $267 billion in Chinese imports that have not yet been targeted, which he could still do after the G20 to put even more pressure on Beijing if they don’t sign a deal. That would track with what he’s done since becoming president.

In September, three sources familiar with the Trump administration’s strategy toward Beijing told me that the White House wants to decimate China’s economy. One way to do that is to increase tariffs so that US companies find the cost of doing business in China too high.

That may explain why Trump personally declined two previous trade deals between the US and China. And in October, the Trump administration said it would no longer engage in trade talks until China agreed to its many wishes, including making it easier for US companies to compete in the Chinese market and ending the theft of American intellectual property.

The delay in reaching an agreement has hurt the world economy. In October, the International Monetary Fund (IMF) — a world body that helps keep the global economy stable — released a major report that projected the world’s economy will grow by 3.7 percent, which is 0.2 points lower than it had estimated in April. That’s the same rate of growth as 2017, signaling a slight slowdown — and Trump’s trade policies are a major reason why.

“[T]he forecast for 2019 has been revised down due to recently announced trade measures, including the tariffs imposed on $200 billion of US imports from China,” the IMF’s “World Economic Outlook” report concluded.

So it’s imperative that both sides end their trade spat, but that’s easier said than done. “Tariffs are very easy to put on, but very hard to take off,” Michael Froman, America’s top trade representative from 2013 to 2017, said.

But it looks like nothing short of complete capitulation by Xi will satisfy Trump. He said as much himself in the Wall Street Journal interview: “The only deal that would really be acceptable to me ... would be China has to open up their country to competition from the United States. They have to open up China to the United States. Otherwise, I don’t see a deal being made.”

That’s unlikely to happen, which means the hope for a signed, sealed, and delivered agreement at the G20 summit is slim to none.

No deal means the US-China relationship will only get worse

Ryan Hass, who was a top China official on President Barack Obama’s National Security Council from 2013 to 2017, wrote on November 26 that the Trump-Xi meeting is the biggest chance for the US and China to improve their ties.

“At this point, nothing short of leader-level intervention will arrest the current downward trend in the relationship,” he wrote, warning that “there is growing risk of mutual miscalculation leading to unintended escalation.”

A tiny Taiwanese island is viewed through the hole of a gun emplacement in front of the Chinese city of Xiamen on April 20, 2018.
A tiny Taiwanese island is viewed through the hole of a gun emplacement in front of the Chinese city of Xiamen on April 20, 2018.
Carl Court/Getty Images

That’s a huge problem. The two countries have profound differences on a number of issues beyond just trade. Perhaps the biggest are disagreements over Taiwan, a staunch US ally that some experts worry China aims to invade, and over how to handle a nuclear-armed North Korea.

If trust between the two countries only dwindles, it will be harder for them to cooperate on those or other issues.

But the US isn’t doing much to mend ties. In fact, it seems to be doing just the opposite.

On October 4, Vice President Mike Pence gave a speech on China using rhetoric reminiscent of the Cold War between the US and the Soviet Union. Pence said America “won’t back down” from China’s aggression and accused Beijing of trying to influence US elections because it “want[s] a different American president.” He did everything short of calling China an “evil empire” during the address.

While it was never likely that Washington and Beijing would become best friends as China’s power rose to meet America’s, it didn’t have to be this bad. It’s a shame Trump and Xi only have a dinner to work out all their problems.

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