US-China Trade Deal Unlikely Without Chinese Concessions, Experts Say

Craig Allen, a senior counselor at the Cohen Group and the former president of the U.S.-China Business Council, said that whether the two countries get to the negotiating table depends on whether "the Chinese take aggressive actions against fentanyl," calling that "the table stakes." He said that "if the Chinese are able to do that, then I think that negotiations are possible."

Lingling Wei, senior China correspondent for the Wall Street Journal, agreed, saying that "China definitely needs to show some kind of willingness, and concrete action to show to the United States," before negotiations can begin. She called China's response to President Donald Trump's fentanyl-related tariffs a "huge miscalculation." China saw those tariffs as a tit-for-tat escalation "without realizing how serious the fentanyl issue is to the United States, not just to the president himself, [but] for millions of American people."

Jeff Gerrish, the former deputy U.S. trade representative for Asia, Europe, the Middle East, and Industrial Competitiveness during the first Trump administration, said that Chinese action on fentanyl could serve as "some sort of down payment" to "help kick things off." He also cautioned that he doesn't expect U.S.-China negotiations before negotiations have concluded with other countries that were subject to reciprocal tariffs. He believes that the administration "is going to want to see some fruit coming out of that and put maximum pressure on China."

The panelists were part of a discussion hosted by the Washington International Trade Association and the Asia Society Policy Institute about the possibility of a "phase two" trade deal between the U.S. and China.

Once negotiations do begin, Gerrish said, he doesn't expect a grand bargain like the aims of the phase one agreement in President Donald Trump's first term: "it's going to be something more modest." He said this was the result of "a level of distrust" between the two countries as well as the "more confrontational approach" they have taken toward each other. Adding to the mistrust, he said, is the fact that members of the Trump administration are "still feeling burned by" China's "failure to comply with the obligations" of the phase one agreement on both purchases and structural elements. Due to these factors, Gerrish said, he thinks "there's a low likelihood that we're going to see this sort of fulsome negotiation happening on all these issues" in future negotiations.

Christopher Adams, a senior adviser at Covington & Burling and former Commerce Department official, suggested that "high-profile purchases [by China] could also help improve the environment" for negotiations. He agreed with Gerrish that the Trump administration is not in a hurry to begin negotiating with China, saying "China is probably, maybe not at the end of the line, but certainly not at the front of the line," when it comes to trade talks.

Part of the difficulty in beginning talks, Adams said, is that the negotiating teams on both sides "don't have a mandate" to begin deal making. He said that what they need is a "clear signal from the two presidents, preferably jointly, indicating that they agreed to start talks." Until the two sides can "get past the pride factor," negotiations won't have any traction, because they lack staying power. The Chinese in particular feel that they don't know who to engage with because "they don't know who to talk to. They don't know who has President Trump's ear," he said. The U.S. needs to choose a primary negotiator, he said, and it should be U.S. Trade Representative Jamieson Greer: "Certainly [Treasury] Secretary [Scott] Bessent and even [Commerce] Secretary [Howard] Lutnick could have a role, but I think USTR needs to be leading on this."

Another challenge, according to Wei, is that China has backed itself into a "hard line stance" against the U.S. She said that China is preparing its people to endure economic hardship by framing the trade war as a continuation of conflict with the U.S. that began with the Korean War: "They're doing that to try to rally the nation, to gird the nation for a very long-term struggle against the United States." However, by framing the conflict in these terms, Chinese President Xi Jinping has restricted himself to a deal wherein "he wouldn't look weak."

She said that China thinks it can better weather a long-term commitment than the U.S. can, especially because Trump has to be worried about the impacts of his economic policies before the midterm elections, while "the Communist Party does not have elections to worry about." Gerrish, now a partner at Schagrin Associates, countered that the Trump administration views its negotiating leverage as "very strong," because "what they see is that the United States has ultimate leverage in the form of access to the U.S. market."

Wei suggested that China's recent warning to countries like Vietnam not to go against Chinese interests in any deals struck with the U.S. is a sign that "China is getting increasingly anxious about the United States actually succeeding in cutting deals with other countries." China issued the warning "right after Xi Jinping came back from Vietnam," which indicates that "his trip was less than a success," and that the U.S. may be succeeding in "this effort to isolate China."

The panelists also discussed the viability of the U.S. changing country of origin laws to take ownership into account so as to counter Chinese-owned factories pumping products into the U.S. Allen said that it would be "exceptionally difficult to take ownership into account" when it comes to countervailing duty or antidumping duty investigations. Gerrish agreed that it would be technically challenging but said that the language in the Section 301 investigation on shipbuilding and maritime practices suggests that the U.S. is serious about expanding country of origin regulations. He said that the potential tariffs "would apply to companies that are owned, controlled or substantially influenced by Chinese companies. So they are expanding this." He said he believes that the administration might use the shipbuilding tariffs as "a template for something they will try to do going forward in other contexts as well."

Wendy Cutler, vice president at the Asia Society Policy Institute, said that she thinks there will be difficulties in implementing any change to country of origin: "I think our export control people have learned [the challenges of implementation] as companies change names, or they have joint ventures, or they disappear, then they come back."