Will There Be a Trade Truce at the G20?

U.S. President Donald J. Trump and Chinese President Xi Jinping will try to find common ground on trade at this year’s Group of Twenty (G20) summit. Can they keep the trade war from escalating?

What’s happening?

This year’s annual G20 summit takes place June 28–29 in Osaka, Japan. Trump and Xi are set to meet separately to discuss their ongoing trade dispute.

G20 gatherings often deal heavily with trade. Since the summits began in 2008, members have repeatedly affirmed their commitment to expanding global trade and reducing barriers, but Trump has questioned that status quo. At last year’s meeting, leaders couldn’t agree to longstanding language against protectionism.

Trade is again at the center, with many leaders worried that global growth is being dragged down by the U.S.-China tariff tiff. Traditional U.S. allies such as Japan and the European Union also say they will put World Trade Organization (WTO) reforms on the agenda, perhaps hoping to appease Trump, who has criticized the trade body.

What’s at stake?

The prospect of a bilateral meeting between Trump and Xi has captured most of the attention, for good reason. It will be their first face-to-face discussion since trade talks between the two countries fell apart in May.

Washington has long complained about Chinese trade practices, from subsidies that violate WTO rules to intellectual property theft, but Trump upped the ante by using tariffs as a stick in negotiations. Chinese and U.S. negotiators were reportedly very close to an agreement last month before the deal fell through.

Trump has since accused Beijing of playing for time so it could negotiate with a future U.S. president instead. In May, he raised tariffs on $200 billion worth of Chinese imports from 10 to 25 percent and threatened to add tariffs on all remaining imports from China, which amount to roughly an additional $339 billion. Economists say the trade war is not only damaging both countries but also the entire global economy.

What are the prospects for a deal?

Many leaders hope that Trump and Xi will use the summit to work out a tariff truce—as they did at last year’s G20 summit in Buenos Aires—or even lay the foundation for a long-term deal.  If Trump is unhappy with what’s on offer, however, he could use the G20 platform to threaten more tariffs or otherwise embarrass China’s leadership.

A big part of the equation is the debate within the Trump administration over how to use tariffs: are they just a means to an end, to be lifted once China submits, or, as some experts believe, have they become the end in themselves? Trump has indicated he believes tariffs will boost domestic producers even if the broader economy suffers. If that view wins out, any G20 truce could be short-lived.

Then there is North Korea. Trump has suggested that trade talks with China could be linked to Beijing’s willingness to help rein in North Korea’s nuclear program. Xi has scheduled his first visit to Pyongyang a week before the G20 summit. Some experts see that as a sign Xi is hoping for progress on both fronts in Osaka.