Donald Trump and Xi Jinping have found themselves engaged in an exceedingly high-stakes game of chicken, a core feature of the US-China trade war. Both of their leaders are scrapping tooth and nail to preserve face on the international stage. As the conflict has flared, tariffs on Chinese exports to the US have climbed to as high as 245%. Neither country is in a good position. The problem becomes neither side wants to appear weak or regressive by retreating from their stated positions.
The trade war comes at a moment when Xi Jinping is confronting some of his biggest challenges in China. He is facing declining consumer demand, a real estate collapse and increasing unemployment. On the other hand, Donald Trump would like to prove that he forced Beijing to surrender. The picture is no less fraught for either leader. As such, they need to get wins for their home markets while carefully managing the artful dance that is international negotiations.
Though the US has insisted that talks between the two countries had begun, Beijing has rebuffed such announcements. The US has not refuted China’s claims that it has been trying to initiate talks, leading to speculation about the sincerity of each side’s commitment to dialogue. The current charade is an example of a “constructive ambiguity,” a strategy where purposefully unclear wording lets both sides walk away with moral high ground.
Taiwan expert Wen-Ti Sung calls this situation a “two-level game.” He acknowledges that, like all good negotiating ploys, both leaders are attempting to create the appearance of victory. “It’s like two race cars going at each other: whoever swerves first will be seen as the weaker of the two parties. At this point, neither party wants to be perceived as weak,” says Mr. Sung.
Ja Ian Chong highlights the anxiety surrounding the negotiations, stating, “From the perspective of negotiations, the United States must be the more anxious party at present.” He argues that China has not yet begun negotiating seriously. It remains a negotiable document, and heads-down now on arriving at the right price point.
Major US retailers like Walmart are sounding alarms about inflation. They caution that shrinking commerce between the two countries might have an impact on stockpiles. These warnings are a sign of rising pressure on Trump. He will have to find a balance between a resolution that relieves domestic economic pressure but shows a feel of strength abroad.
One final thought from Mr. Sung—To be fair to both president’s current positions in the trade war, Mr. They understand that this will no longer lead to a winner-takes-all scenario for either party. This acknowledgment reflects a shift in strategy for both leaders as they navigate the turbulent waters of international trade relations.
With war drums beating louder, some diplomats and analysts argue that a new neutral mediator might grant both sides an off-ramp with a face-saving compromise. “This is Beijing trying to explore the possibility of using word games to create an off-ramp for both sides, so that they can gradually climb their way down from this escalation spiral,” Mr. Sung continues.
Despite these difficulties, the case for de-escalation is still compelling. Ja Ian Chong asserts, “A de-escalation would be to the overall benefit of both sides.” The prospect of both countries finding common ground is essential not only for their own economies but for global markets that are showing signs of strain due to uncertainty.
Yet both leaders are currently at a standstill. In truth, they’ll probably occupy their respective seats up to the point that one side demonstrates sufficient eagerness to compromise. “They are going to have this standoff until they see which side blinks first,” Chong notes.