Transactional Trump may well improve US-China ties

Although Donald Trump’s return as president of the United States brings greater uncertainty, his transactional and pragmatic approach may also provide new possibilities for cooperation and stabilising relations with China. For a start, the president-elect is likely to open new trade and investment negotiations with China.

True, during Trump’s first term from 2017-2021, significant changes took place in the US’ economic and trade relationship with China. In 2017, for the first time, the US national security strategy report positioned China as a strategic rival. Months later, the Trump administration started to slap tariffs on Chinese imports, escalating the trade friction into a trade war. During his election campaign, he also said he was considering tariffs of 10-20 per cent on all imports and 60 per cent or higher on Chinese goods.

But Trump, whose administration negotiated the first phase of the Sino-US trade agreement, may also continue to push for Sino-US economic and trade deals in his second term, including on investment. He may well direct his incoming administration to open new negotiations with China on subsidy policies, overcapacity issues and trade imbalances. He could conduct second or third-phase trade deal negotiations based on the first.

Also, Trump holds a relatively open attitude towards Chinese business investment in the US and may encourage or require them to invest and set up factories. Fuyao Glass, for instance, has set up factories and taken root in the US while Contemporary Amperex Technology Limited (CATL) is in discussions with American companies about investing in the US.

Trump has close ties with the business community, including many Fortune 500 companies such as Tesla, Blackstone and Apple. These companies have long-term investments in China and this may prompt some rationality in the new Trump administration, which might even lift some limits on Chinese-owned companies such as TikTok, and sanctions on individuals.

Trump will also need to seek Chinese support to resolve the wars he has promised to. Positioning himself as the president for peace, he has claimed he can end the Russia-Ukraine war before his inauguration, even within 24 hours, and threatened to cut military aid to Ukraine if need be. He also reportedly told Israel to end its war before his presidency starts next January.