THREE-MONTH PAUSE WITH LITTLE CHANCE FOR BARGAIN
Beyond tariff rates, trade deficits and export controls, there was always a deeper ideological divide. While immediate trade war risks have diminished, the fundamental schism between the US and China makes any grand bargain impossible.
Xi Jinping’s January statement in party journal Qiushi that “Western countries are increasingly in trouble” because “they cannot curb the greedy nature of capital” reveals a fundamentally adversarial worldview. This dark vision of the West, with America at its heart, frames China’s Communist Party as the final barrier protecting China from Western capitalist exploitation.
Meanwhile, the Trump administration’s upcoming America First Investment Policy, planned expansion of the Entity List and more selective tariff strategies all point toward accelerated economic decoupling despite the temporary thaw, and despite Mr Bessent’s assurance to CNBC that “the US doesn’t want a generalised decoupling but wants to protect strategic necessities.”
A durable resolution remains challenging given the complex bilateral relationship and deep-seated mutual suspicion.
China now has a three-month window to negotiate a broader arrangement. But one thing is evident: There can be no compromise on what it considers key parts of its economic and political system, like its industrial policy and self-sufficiency drive.
The suspension window will likely lead to more frontloading of Chinese shipments to the US in May and June, potentially boosting growth prospects and helping Beijing achieve its 5 per cent annual target.
