President Donald Trump said Thursday that he expects an agreement “over the next three to four weeks” that would end the escalating trade war with China.
“I believe we’re going to have a deal with China,” said Trump during an executive order signing session in the Oval Office alongside Secretary of Commerce Howard Lutnick. “I think we have plenty of time.”
There was no immediate confirmation from Beijing on whether a deal is likely to happen. And Trump dodged questions on whether China’s leader, Xi Jinping, made the overture to end the tariffs battle.
This is the first time since Trump increased tariffs on China — up to 245% — that the possibility of a deal has appeared on the horizon.
“It’s a game between China and the US in terms of who’s going to blink first,” Nick Vyas, the founding director of USC Marshall’s Randall R. Kendrick Global Supply Chain Institute, told Business Insider before Trump’s Thursday remarks. “China feels that they have all the cards to continue to hold out, and President Trump feels that he has power, because we consume more from China than China consumes from us.”
“Both of these cases are true, and one has to just wait and watch and see which reality will end up shaping up in the end,” he added.
China’s upper hand? Its system of government
Supply chain and geopolitics experts have told Business Insider that Xi may have more time and leverage than Trump.
“Xi can make life difficult for some American tech companies and for farmers in the Midwest, but the damage to China by the US could be much worse,” said Andrew Collier, a senior fellow at the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School. “On the flipside, the political pressure on Trump in a democracy is likely to be much higher once people realize how bad the economy and markets are.”
“China’s authoritarian system is an advantage here,” he added.
Vyas said that while Trump’s term ends within four years, Xi is the lifetime president of China with a “long horizon.”
Xi doesn’t have to worry about elections or consumer sentiment, which could make this a “long, drawn-out battle,” Vyas added.
Vyas also noted that China has dominance in the EV market and controls 85% of the capacity to process rare earth minerals, which would impact the US’s defense capacities and AI ambitions if China completely cuts off that supply.
A history of trade conflict
Trump has a history of raising tariffs on China in attempts to reduce the US trade deficit and bring back manufacturing jobs.
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In 2017, his administration began investigating China’s trade practices and, in 2018, imposed a 25% tariff on certain Chinese exports, such as electronics and auto parts.
In February this year, Trump targeted China with tariffs twice, resulting in 20% in duties on China by the end of the month. On April 2, Trump again hit China with 34% tariffs. After China responded with tariffs on US exports, he then hiked this figure to 125%, then 145%, and now up to 245% according to a White House document.
China has announced a 125% counter-tariff on US goods by April 11 and halted exports of rare earth elements critical to US defense industries.
Previous efforts to reduce trade deficits with China have yielded limited results. In 2024, the trade deficit was about $295 billion, lower than $375 billion in 2017 but still more than double the total amount of US exports to China in a year.
Both the US and China are courting other countries
With the US taking a harder stance on global trade, Ilaria Mazzocco, senior fellow in Chinese business and economics at the Center for Strategic and International Studies, told BI that China is seeing “a diplomatic opportunity” to launch “a charm offensive.”
“Conversations between the EU and China seem to have taken a softer tone,” said Mazzocco. “There’s hope on Beijing’s side that by showing they are a more status quo, stable, reliable trading and global partner, countries are going to feel reassured, and it’s going to improve its foreign relations, like with the EU, where there’s been a lot of tension.”
After meeting with Spanish Prime Minister Pedro Sánchez in Beijing last week, Xi embarked on a tour across Southeast Asia to sign deals on infrastructure and trade. Xi’s stop in Malaysia led to deals on AI, rail connectivity, and the export of coconuts.
EU leaders are also planning to travel to Beijing for a late July summit with Xi, which Mazzocco says could be a chance for China to acknowledge it has a structural issue of overproduction and make commitments to address it.
However, Mazzocco added, it is unlikely Southeast Asian countries will replace the US with China as a trading partner, because China doesn’t have a strong enough internal demand from consumers to absorb imports from overseas.
The US is also in talks with leaders of the EU. At the White House on Thursday, Trump told Italian Prime Minister Giorgia Meloni that a deal between the EU and US would “100%” be reached “at a certain point.”
Mazzocco points out that unpredictability of Trump’s policies may be harmful for striking a deal, and runs the risk of having US allies quietly pull back the alliance in the long run.
“We seem to understand that part of the goal is to extract concessions from trading partners, and those concessions may be economic or defense related, but the unpredictability is unhelpful.” said Mazzocco. “This is really dangerous because it could really undermine business sentiment globally, and could also in the long term incentivize US trading partners to be a little less reliant on the US, diplomatically and on trade.”
