Welcome to the 256th edition of Trade War.
China and the US may be inching towards talks. Trump praises his relationship with Xi Jinping, suggests lifting tariffs in exchange for a TikTok deal. And while the US miscalculated in thinking China would respond to threats, “it is likely they’ll find some MO where both sides declare victory,” I tell Al Jazeera.
Xi travels to Southeast Asia and pushes idea of an “Asian family” as Beijing and Washington joust for influence. And as vice president JD Vance prepares to visit India, New Delhi is hoping for progress on trade talks.
India could be a “natural next step for companies as they diversify away from China,” says the author of this newsletter appearing on India’s NDTV. China’s first quarter GDP surprises on upside but the trade war is likely to hit growth soon. And with Beijing banning Boeing purchases, a 737 MAX leaves China and flies home to the US.
Notable/In depth ~
“I do believe this is a moment of reckoning” for China’s economic model, says MIT professor Yasheng Huang
Most Americans think tariffs on China will be bad for the US and bad for them personally, says a new Pew Research survey
I discuss the mismatch between what young Chinese study and the jobs available for them today, on Asharq Business
“They’re aware that it will hurt in the heartland”
In this segment on the U.S.-China trade war, I tell the BBC how Beijing is strategically punishing Trump-supporting red states, including agricultural ones like Montana where I live, “by putting on very specifically targeted tariffs . . . on things like wheat, on pork, on soybeans.”
“They’re aware that it will hurt in the heartland,” I say.
You can watch the full BBC segment here and below.
Inching towards talks?
China and the U.S. may be inching towards talks.
While both sides have repeatedly signaled they are open to negotiations, recent disparaging remarks about China by cabinet officials, including vice president JD Vance who referred to “Chinese peasants,” has angered Beijing.
More than anything, China wants to see a more respectful attitude from the U.S., as well as assurances that talks will lead to concrete progress on reducing tariffs, reports Bloomberg News, citing a person familiar with the Chinese government’s thinking.
Also key: China’s leaders want to ensure American sanctions and the status of Taiwan are on the discussion agenda, and want the U.S. to name a point person for negotiations.
“There is a bit more clarity on what China is looking from: respect, consistency and a point person,” said Michelle Lam, Greater China economist at Societe Generale.
Both sides appear to be “inching toward the negotiating table,” says Scott Kennedy of the Center for Strategic and International Studies (CSIS). “Both sides are trying to convey they are in a stronger position and that the ball is in the others’ court, but they’re now also trying to shape the potential agenda, participants and process for talks.”
Trump praises Xi, ties TikTok to trade deal
Even as his cabinet officials attack China, Trump has continued to praise the Chinese president and China, suggesting he wants to keep the door open to a meeting with Xi. Trump also said that China had reached out repeatedly in an effort to make a deal.
“I have a very good relationship with President Xi, and I think it’s going to continue,” Trump said on Thursday to reporters in the Oval Office. “I would say they have reached out a number of times,” Trump added, while avoiding answering whether he and Xi had had any direct contact.
“If you knew him,” Trump said, referring to Xi, “you would know that if they reached out, he knew exactly. He knew everything about it, he runs it very tight, very strong, very smart.”
Trump also suggested he was open to reducing tariffs on China and that it could happen in tandem with a deal allowing TikTok to stay open in the U.S.
“At a certain point I don’t want them to go higher because at a certain point you make it where people don’t buy. So I may not want to go higher, or I may not want to even go up to that level,” Trump said. “I may want to go to less because, you know, you want people to buy.”
“TikTok is good for China. And I think they’d like to see us do a deal, especially the deal that we have pretty much done with some of the best companies in the world,” Trump continued.
“It’s a natural—if we’re making a deal. I guess we’ll spend five minutes to talk about TikTok. It wouldn’t take very long,” he said.
“MO where both sides declare victory”
While the U.S. miscalculated in thinking China would respond to threats and quickly come to the negotiating table there is still the likelihood of a deal eventually happening, I say in an interview.
“For China, this is an almost existential struggle both on trade and security,” Dexter Tiff Roberts, a nonresident senior fellow at the Atlantic Council’s Global China Hub told Al Jazeera.
Xi’s desire to project an image as a strongman, both at home and overseas, also makes it difficult for China to offer up any concessions, Roberts says. Still, the fact that a continued trade war has the potential to devastate the two country’s economies, raises the odds that the two sides will eventually reach some kind of agreement.
“It is likely they’ll find some MO where both sides declare victory, otherwise it’s like going nuclear and it will shut down entire trade between U.S. and China,” Roberts says.
“I don’t even understand how that works and it will have shocking global implications.”
An ‘Asian family’ should stand in unity, says Xi
On his recent trip to Vietnam, Malaysia and Cambodia, Xi Jinping called for unity against Trump’s tariffs, described the countries as an “Asian family” that should stand together.
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