Best China Trade Deal for Trump: No Deal at All
TL/DR –
The article states that the US should prioritize its domestic market instead of seeking trade deals with China, as past negotiations have proved ineffective, with Beijing frequently failing to honor its obligations. The author, Mihir Torsekar, cites examples of failed engagements such as the “Phase One” agreement in 2020 where China promised to purchase $200 billion worth of additional US goods over two years but ended buying less than 60% of what it had committed to. He recommends the US to focus on reindustrialization, complete investigations in strategic sectors like shipbuilding and semiconductors, and make efforts to secure domestic production of rare-earth minerals.
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US Trade Relations with China Over the Years: A Tale of Unfulfilled Promises and Failed Strategies
Decades of engagement with China have failed to deliver the desired results for the US, prompting some to suggest that it might be time to leave the negotiation table. The roots of this issue can be traced back to former President Ronald Reagan’s time in office when he met with Chinese leader Deng Xiaoping in 1984, hoping to push China towards American-style capitalism and democracy. However, these ideas never came to fruition.
Over the years, multiple U.S. Presidents have tried to use the US’s relationship with China to their advantage, only to be met with disappointment. Deng Xiaoping’s refusal to engage with President George H.W. Bush during the Tiananmen Square massacre in 1989 is an apt example. When President Bill Clinton tried to link China’s favored trade status with its human rights record in 1993, Beijing simply ignored it. The same was true when his successor, President George W. Bush, granted China “Permanent Normal Trade Relations” status unconditionally.
Failure of Past Trade Deals with China
One of the significant challenges has been China’s failure to fulfill its commitments to past trade deals. For instance, during a White House meeting in 2015, Chinese President Xi Jinping pledged not to militarize the South China Sea. But China did exactly that. Similarly, President Donald Trump’s “Phase One” trade agreement of 2020, which required China to purchase $200 billion worth of additional US goods over two years, fell short as China bought less than 60% of what was agreed.
In the industrial sector, China continues to follow its five-year plan, which focuses on advanced manufacturing as the world’s “main battlefield.” Despite the numerous agreements and commitments, Beijing has consistently failed to honor its promises, causing American Presidents to question their country’s trade relations with China.
The Case for a New Approach to US-China Trade Relations
Considering the repeated disappointments, some argue that the US should stop seeking grand bargains that have continuously eluded previous administrations. Instead, the US should leverage its current position to discipline Chinese trade behavior. This approach seems to be working as the US’s bilateral goods deficit with China fell to $221 billion in 2025, a 50% reduction from its peak of $442 billion in 2018.
The Impact of US-China Trade Relations on the US Economy
Even though China’s share of US imports has declined substantially, the support for new US investments continues to grow. As evidence, US manufacturing construction spending has tripled since 2021. There’s also been an increase in reshoring announcements in sectors such as semiconductors, batteries, and clean energy.
Nevertheless, the US still has a long way to go in its efforts to re-industrialize. One of the key challenges is the significant technological gap with China. For example, America’s most advanced artificial intelligence chips are still approximately five times more powerful than Huawei’s best. However, the decision to license H200 sales to China could potentially surrender this lead, suggesting that this decision should be reversed.
The Need for a New Trade Strategy with China
Based on the experiences of past administrations, it is clear that personal chemistry and presidential leverage alone cannot influence Beijing to align with American interests. Therefore, instead of chasing elusive grand bargains, the US should prioritize securing its home market and encouraging domestic manufacturing investment. By doing so, the US might be able to achieve a more favorable outcome in its trade relationship with China.
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