During the Biden presidency, Donald J. Trump often retreated to his opulent salon at Mar-a-Lago, adorned with mirrors and gold accents, where he had once welcomed China’s leader, Xi Jinping. He would share his thoughts with visitors, lamenting the fate of the trade agreement he finalized with China in 2020.
Trump would criticize the “idiots” in the White House who he believed had disregarded “my trade agreement,” contemplating how, if he were to secure a second term, he could negotiate a landmark deal with Xi.
Now that he has returned to the Oval Office, Trump is contemplating a new trade agreement with China.
According to more than seven current and former advisors and sources acquainted with Trump’s views, while there will be considerable challenges in finalizing any agreement, the president is interested in negotiating a broad deal with Xi that extends beyond merely adjusting the trading relationship.
Trump has shown a keen interest in a deal that would encompass significant investments and Chinese commitments to increase purchases of American goods, even though China did not meet the additional $200 billion purchase commitment from the 2020 agreement. He envisions including topics like nuclear weapons security, which he hopes to negotiate personally with Xi, according to his advisors.
Following a familiar strategy, Trump has already employed tariffs and other threats in his negotiation efforts. On February 1, he imposed a 10 percent tariff on all Chinese imports, labeling it an “opening salvo,” which promptly resulted in retaliatory measures from China. Additionally, he has considered revoking the permanent normal trading relations previously granted to China over 20 years ago.
China is recognized as one of America’s foremost national security challenges, but it is also a crucial trading partner and key player on various issues, including nuclear security, technology, and pandemic readiness.
The extent to which the United States and China enhance their relationship or descend into conflict may significantly depend on Trump’s unpredictable leadership as he pushes Beijing to concede more to U.S. demands.
Michael Pillsbury, a China expert who advised Trump during his first term’s trade negotiations, stated that the president shared with him “a few months ago” his desire to broker a mutually beneficial deal with Xi Jinping.
Pillsbury noted that the Trump team is deliberating various aspects of the negotiations, such as identifying who will oversee the discussions, which elements of the 2020 trade agreement China did not uphold, and strategies to re-engage China in talks.
“The internal discussions have begun,” he indicated.
Matthew Turpin, a former White House official under Trump who is now a fellow at the Hoover Institution, mentioned that it comes as no surprise that Trump, who presents himself to American voters as a deal maker, seeks a new trade arrangement with China that favors the U.S.
“If the day ends in ‘y,’ it’s a good day for a deal,” Turpin remarked. However, he added, “Donald Trump is not inclined to engage in what he would consider unfavorable agreements.”
Advisors and analysts warn that both governments must navigate significant obstacles to finalize a deal, and the Trump administration has yet to clearly define its objectives concerning China. There have been discussions about potentially arranging for Xi to visit Mar-a-Lago or for Trump to travel to Beijing, but no official trip is on the calendar.
Advisors such as Howard Lutnick, Trump’s commerce secretary; Treasury Secretary Scott Bessent; and billionaire Elon Musk have been encouraging the president’s instincts, asserting that he is in a position to negotiate a considerable agreement, according to a former official and another knowledgeable party.
The president and his advisors hold the Chinese accountable for not adhering to the terms of the 2020 agreement, as well as blaming the Biden administration for not enforcing it. During Trump’s first term, he engaged in trade discussions with China, ultimately imposing tariffs on over $300 billion worth of their products to compel them towards an agreement, levies that Biden elected to maintain.
In their 2020 accord, Chinese representatives committed to opening certain markets to foreign enterprises, enhancing protection for technological secrets, and increasing purchases of American agricultural commodities and energy. However, they fell drastically short of those purchasing commitments, which Beijing attributed to the COVID pandemic.
On his first day in office, Trump issued an executive order instructing his advisors to evaluate China’s adherence to the agreement and determine whether to impose tariffs or other penalties by April. During his confirmation hearing that January, Bessent suggested Beijing might make “catch up” purchases to meet those commitments.
Some U.S. analysts speculate that recent downturns in the Chinese economy could prompt Xi to be more amenable to reaching an agreement. However, the U.S.-China relationship has become increasingly fraught, making the path to a new pact even more difficult.
The struggles within its property sector have compelled Beijing to rely more heavily on exports. China is inundating global markets with vehicles, solar panels, and various other goods, which has negatively impacted manufacturing in other countries.
Wendy Cutler, a former U.S. trade negotiator now serving as a vice president at the Asia Society Policy Institute, stressed that any potential arrangement must tackle these complex issues. “Even if there was a desire to initiate negotiations with China, the challenges would be monumental,” she asserted.
The view from Beijing
Chinese officials appear to approach Trump with caution, anticipating continued tense relations. They recognize that he is unhesitant in implementing heavy tariffs and other penalties yet believe that his inclination to revise trade relations might encourage him to return to the negotiating table.
In a recent analysis, Zhu Min, a former high-ranking Chinese official and ex-deputy managing director of the International Monetary Fund, along with two co-authors, argued that Trump would feel pressured to fulfill commitments to voters through economic and job growth and increasing exports. Conversely, they noted, Trump “exhibits an arrogant and self-righteous demeanor” and tends to wield power in a “random, coarse manner.”
“China needs to recognize Trump’s dual nature, closely monitor his actions, and negotiate with him based on his fundamental political goals as the baseline while capitalizing on his unpredictable and volatile character to leverage that baseline,” they advised.
However, some Chinese analysts have downplayed the likelihood of a deal given the increasingly strained relationship. Yet, Chinese officials and think tank experts are working on a proposal aimed at capturing Trump’s interest, discussing the idea with business leaders and other experts.
According to a former diplomat who requested anonymity to speak on confidential discussions, one potential Chinese offer might involve investments in the United States projected to create approximately half a million jobs in sectors like solar, electric vehicles, and batteries. Chinese firms are receptive to exploring minority stakes in joint ventures or licensing their technologies to American companies, the diplomat mentioned.
This proposal could also encompass significant Chinese purchases of American exports, collaboration on maintaining peace in North Korea, and assistance in rebuilding Ukraine. Moreover, it may include commitments to uphold the dollar as the leading global currency, which aligns with Trump’s concerns about China and Russia’s attempts to establish an alternative.
It remains uncertain what the Chinese would seek in return, although many analysts suggest Xi would likely pursue relief from the tariffs Trump has levied and the export restrictions impacting China’s access to advanced technology.
Chinese officials and those with government connections are also making efforts to create unofficial back channels, which have traditionally facilitated the exchange of information during U.S.-China negotiations.
They have especially been inquiring about the influence that Musk — who has significant business interests in China via Tesla — may hold in the Trump administration. Han Zheng, China’s vice president, who represented Xi at Trump’s inauguration, met with Musk in January, along with Vice President JD Vance.
It’s unclear how extensively Musk has discussed China with Trump; however, a former official familiar with their discussions indicated that Musk expressed optimism about the potential for deals and emphasized the necessity for the U.S. to seek cooperative paths with China to mitigate rising tensions.
The question of investment
Mr. Bessent and Mr. Lutnick — who may end up leading any negotiations with China — are evaluating proposals they believe could rebalance trade, insiders familiar with the discussions indicated.
This includes significant Chinese investments in the United States; large purchases of American agricultural products, airplanes, and other goods; as well as arrangements addressing Chinese manufacturing excess.
Lutnick opted not to comment. Bessent, Musk, and a White House spokesperson did not reply to requests for comment. A source familiar with Bessent’s perspective, who requested anonymity, noted that Bessent is primarily focused on enforcing China’s past trade commitments at this time rather than future demands.
Welcoming Chinese factory investments in the U.S. might generate significant internal discord within the Trump administration, as several officials including Secretary of State Marco Rubio, National Security Adviser Mike Waltz, and Senior Trade Counselor Peter Navarro consider Chinese investment to be a security risk.
Recently, federal and state governments, along with Congress, have adopted a more stringent stance against Chinese acquisitions of technology firms and real estate.
Nevertheless, Trump has contemplated agreements that others would dismiss, like endorsing a Japanese Nippon Steel investment in U.S. Steel and seeking a buyer for TikTok. During his campaign, he mentioned an openness to Chinese companies establishing auto manufacturing facilities in the U.S., provided they hire local employees.
An attendee of meetings during Trump’s first term, which reviewed incoming investments for national security implications, shared that the president had disregarded intelligence assessments regarding associated risks, advocating for selling assets to the Chinese if the terms were favorable.
Unlike many other officials, Trump doesn’t seem to hold a rigid ideological position with regards to U.S. technology restrictions on China or Taiwanese democracy, instead viewing these matters as leverage against Beijing.
Trump perceives his relationship with China as personal, viewing it as a matter to resolve with Xi personally. In his inaugural month, he adopted a confrontational attitude toward foreign leaders from Canada, Colombia, Denmark, and Panama, while expressing amicable sentiments towards Xi.
In January, Trump posted on Truth Social that he and Xi would collaborate to create a more peaceful and secure world.
“I anticipate that we will tackle multiple challenges together, commencing immediately,” he remarked.
Chris Buckley and Alan Rappeport contributed reporting.
