Should the US and China give up on a deal?

08/09/2018

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Derek Scissors

The $68 billion affected thus far in the US-China trade standoff is a tiny fraction of economic activity in either country. Significant escalation, if it occurs, is weeks or months away.  The bigger problem is that, if a deal is reached, only a year and a half of calm may result. The two countries’ short-term behavior is being fueled by the realization that no agreement will last.

The Trump administration is a difficult negotiating partner because it is divided on China goals. A lower bilateral trade deficit? Retaliation for coercive technology practices? A fundamental change in the PRC’s economic model?

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