MW Trump's best China trade deal is the one he doesn't make
By Mihir Torsekar
Three decades of failed engagement with Beijing show why U.S. should walk away from the bargaining table
U.S. President Donald Trump with Chinese President Xi Jinping in Beijing on May 14.
The most consequential outcome Trump can achieve in China is making clear that America is prioritizing its home market.
President Donald Trump should resist the temptation to return from China with a deal on trade. The history of U.S.-China relations is littered with American presidents trying to convert engagement with Beijing into leverage - and coming up empty-handed.
The roots of this disappointment trace back to Ronald Reagan. After meeting with Chinese leader Deng Xiaoping in 1984, President Reagan believed that market reforms could move China toward American-style capitalism, democracy and individualism. But that didn't happen.
In 1989, Deng refused to take George H.W. Bush's phone calls during the Tiananmen Square massacre. In May 1993, Bill Clinton signed an executive order conditioning the annual renewal of China's most favored nation trade status on "substantial progress" in human rights issues. Beijing simply ignored it. When renewal came due in 1994, Clinton granted MFN unconditionally, conceding that the strategy had "reached the end of its usefulness."
This type of accommodation subsequently became Washington's default posture. It paved the way for China's entry into the World Trade Organization in 2001 and then for "permanent normal trade relations" with the U.S. in 2002.
Essentially, U.S. presidents keep learning the same lesson - Beijing doesn't abide by its obligations. At the White House in 2015, Chinese President Xi Jinping pledged that Beijing would not militarize the South China Sea. Then China proceeded to do exactly that.
Trump himself learned a hard lesson during his first term. In 2020, he negotiated a "Phase One" agreement requiring China to purchase $200 billion worth of additional U.S. goods over two years. Beijing ended up buying less than 60% of what it promised. In fact, China missed its targets in every key category, including agriculture, manufactured goods, energy and services.
At last October's summit in Busan, South Korea, Washington threatened sweeping software export controls. Instead, U.S. negotiators suspended a new Affiliates Rule, cut fentanyl-linked tariffs by 10 percentage points and licensed Nvidia's (NVDA) H200 chips for the Chinese market. In return, Beijing offered only nonbinding pledges on fentanyl trafficking, soybean purchases and rare-earth export controls.
The lesson is clear. Beijing doesn't honor its commitments. Instead, it continues to pursue the industrial strategy spelled out in its latest five-year plan - with advanced manufacturing as the world's "main battlefield." This is the playbook Beijing continues to use in telecommunications, solar, batteries, shipbuilding and semiconductors - import the technology, build state-backed substitutes, displace foreign competitors and dominate the global market.
What Trump should bring to Beijing is a new resolve to stop chasing grand bargains that have eluded every previous president.
The better strategy is to reinforce the leverage Washington already holds. Tariffs have done more to discipline Chinese trade behavior than three decades of dialogue. America's bilateral goods deficit with China has already fallen to $221 billion in 2025 from $442 billion in 2018 - a 50% reduction over seven years.
In the nine months following the April 2025 imposition of reciprocal tariffs, Chinese exports to the United States declined by an estimated $109 billion against the 2022-24 baseline. Roughly 61% of that decline, about $70 billion, was redirected to third-country markets. That diversion is further proof that decoupling is real: Beijing is rerouting goods because the U.S. market has grown too expensive to serve directly. The Chinese share of U.S. imports has now fallen below where it stood before Beijing's WTO accession 25 years ago. And Mexico has now overtaken China as America's largest goods-trading partner.
Support for new U.S. investment is also growing. U.S. manufacturing construction spending has roughly tripled since 2021, to a record annualized pace, driven by tariffs, the CHIPS Act, and the Inflation Reduction Act's 45X manufacturing credit. Reshoring announcements in semiconductors, batteries and clean energy have also followed.
Now Trump must finish the work. His administration's various Section 301 trade investigations - in shipbuilding, semiconductors and other strategic sectors - should be completed.
The United States certainly has the potential to reindustrialize. Consider that America's most advanced artificial-intelligence chips remain roughly five times more powerful than Huawei's best. That gap is projected to widen to 17 times by 2027.
But last December's decision to license H200 sales surrenders that lead. It should be reversed. And Washington must move ahead on mineral security - and push for domestic rare-earth production and strategic stockpiles before Beijing chooses to shut off U.S. access.
The goal should be to ring-fence the American market from Chinese intrusions. It's past time to lock in new, domestic manufacturing investment.
Every U.S. president since Reagan has believed that the right combination of personal chemistry and presidential leverage could pull Beijing toward American interests. But nothing has worked. Tactical concessions cannot buy durable cooperation from a regime whose stated objective is to displace the United States by mid-century. The most consequential outcome Trump can achieve is making clear that America is prioritizing its home market.
Mihir Torsekar is a senior economist at the Coalition for a Prosperous America.
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Plus: Nvidia moves one step closer to a breakthrough on Chinese exports after reaching another milestone
-Mihir Torsekar
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May 14, 2026 11:25 ET (15:25 GMT)
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