[Insight & Opinion] Can the US and China Reach an Early Agreement on Tariff Negotiations?

Trump’s Intensified Pressure on China
Prolonged Standoff Likely to Hurt the U.S. More
U.S. May Seek Justification, While China Gains Tangible Benefits

President Trump has postponed the application of reciprocal tariffs for 90 days for countries other than China, but has raised tariffs on China to 145%, signaling a strategy to differentiate China from other nations. However, on April 17, President Trump mentioned that he is in talks with China and suggested that a trade agreement with China could be reached within the next three to four weeks, drawing global attention to the possibility of an early settlement between the United States and China.

Meanwhile, at a regular briefing on April 10, the Chinese Ministry of Commerce stated, "If you want to talk, the door is open, but if you want to fight, we will go to the end." By raising tariffs on the United States to 125% and declaring that it would "ignore" any further tariff increases by the United States, China has signaled preparations for a prolonged standoff. The current situation of the two countries can be summarized as follows.

First, according to the South China Morning Post, the first Trump administration focused on pressuring China to expand imports of American goods, while the Chinese government perceives that the second Trump administration is demanding a kind of "submission" from China that goes beyond tariffs. The Chinese Ministry of Commerce's demand that the United States treat China with proper respect as a condition for negotiations is cited as evidence of this perception.

Second, the ratio of China's exports to the United States to its GDP is 2.8%, while the ratio of U.S. imports from China to U.S. GDP is 4%. This indicates that a reduction in U.S. imports from China would have a 40% greater impact on the U.S. economy than a reduction in China's exports to the United States would have on the Chinese economy. Furthermore, between 2000 and 2022, the number of items the United States depends on for imports from China has quadrupled, while the number of items China relies on the U.S. supply chain for has been halved. Therefore, in the overall tariff war between the two countries, the United States is likely to suffer much greater pain than China.

Third, China's technological capabilities in advanced industries, including AI, have caught up to a significant extent with those of the United States, so a ban on exports to China is not a major issue. Moreover, through the trade sanctions imposed during the first Trump administration, China has already become seasoned and prepared for a trade war, and, as in the "DeepSeek" case, such measures could even serve as a catalyst for China's long-term technological advancement.

Fourth, in terms of political endurance, the United States cannot compete with China. The United States faces midterm elections in November next year and a presidential election in November 2028, while the Chinese Communist Party does not hold elections and President Xi has no term limits. Therefore, as time passes, the Trump administration will be increasingly pressured by growing negative domestic public opinion, whereas the Chinese government is likely to be bolstered by patriotic support from its people, strengthening its strategy of endurance.

Fifth, the longer the tariff war between the United States and China continues, the greater the risk that U.S. global leadership will be damaged. Since the "Day of Liberation" when Trump implemented reciprocal tariffs, the value of the dollar and U.S. Treasury bonds?representative safe-haven assets in the global economy?has plummeted, drawing attention to a loss of investor confidence.

While it took two years for the two countries to reach an agreement during the first Trump administration's trade war, the current tariff war is likely to take even longer. In addition, as the standoff between the United States and China becomes more prolonged, the side with greater endurance will have the advantage. However, as the confrontation drags on, both countries will suffer increasing damage, making an eventual agreement inevitable. It appears likely that President Trump will secure the superficial justification that China has made concessions, while China will walk away with substantive gains.

Kim Dongwon, former visiting professor at Korea University