Why US-Chinese Relations Depend on More Than a Trade Deal

There was much confusion emerging from the White House over the US-China trade deal on Monday. Before the coronavirus pandemic worsened relations between both nations, US President Donald Trump and Chinese Vice Premier Liu He signed Phase One of a US-China trade agreement that slashed some US tariffs on Chinese goods in exchange for Chinese commitments to purchase more of American farm, energy and manufactured goods.

However, COVID-19 shifted the US’s attention away from establishing a free trade agreement with China. The US President’s rhetoric toward Beijing subsequently worsened. In April, Trump claimed to have evidence that the coronavirus started in a Chinese lab, but he offered no details. Later on in the month, he also stated that China “will do anything” to stop his re-election as the row between the US President and Chinese President Xi Jinping worsened.

Trump’s China Stance Thrown Into Confusion

But as Trump’s priorities started to shift toward liberalizing trade between America and China, which was one of his central campaign pledges, trade advisor Peter Navarro did not help matters when he declared that a trade deal between both countries was over this past Monday. Navarro told Fox News that the turning point came when the Trump administration learned about COVID-19’s existence after a Chinese delegation left Washington following the signing of Phase One of the deal on January 15.

The comments caused US equity futures to drop on Monday night, but they soon rebounded on Tuesday as major future indexes indicated a gain of 0.9 percent, coming back from being down 400 points on the Dow. Asian markets like Japan’s Nikkei responded with gains as well, adding 0.5 percent on Tuesday.

Navarro’s Fox News interview also provoked a reaction from the US President himself, who tweeted later on Monday evening that the trade deal is still in place.

Phase One of the Trade Deal is Still Intact

The special advisor provided CNN with a statement that his comments “had nothing to do with Phase One of the deal,” and said that they were targeted at the lack of trust Washington has in the Chinese Communist Party for hiding the true extent of the coronavirus’s impact.

A trade pact between the US and China will improve trade between both countries in the long-term to a certain extent. It halves tariff rates on $120 billion worth of goods, but most of the steeper duties — which affect $360 billion of Chinese goods and more than $100 billion worth of US exports — remain intact. This trade agreement is only the first step toward improving trade relations between both sides and foreign relations in general. But it will be difficult to achieve the former unless the latter improves substantially, and there are still many factors hindering that outcome.

Not only has the coronavirus caused a rift between Beijing and Washington, but the Guardian’s Patrick Wintour refers to a “new cold war” between both sides. As China asserts itself in Hong Kong and on the border with India, the US realizes that it has a new menace to deal with. Trump is already inviting nations to join its anti-China alliance, but as Mira Rapp-Hooper wrote in her book Shields of the Republic, the US President has insulted so many of his country’s allies that he will find it difficult to rally them behind a new alliance to tackle China.

Trump Needs to United US Allies Against China

After 9/11, George W. Bush rallied NATO behind him to tackle the threat of terrorism before the 2003 Iraq War caused him to drift apart from certain nations. The US now needs a leader who can do the same with China, and it needs a strategy on how it is going to tackle the rising threat of Beijing.

The coronavirus has caused many Western nations to rethink their relationship with China, but should Trump win a second election, he needs to repair relations with his European allies and persuade them to support his new bid to thwart China’s rise to power. This is the opportune moment for him to do so.

If US-Chinese relations in general continue to deteriorate, it will be hard to see how both sides can cooperate on trade. Trump may have downplayed Navarro’s comments for now, but that does not mean the US-China trade pact won’t end at a later date.