Tom Orlik, Columnist

Trade Truce Is Becoming Less, Not More Likely

The alternatives to a deal are looking better to both the U.S. and China, which means the prospects for an agreement are looking worse.

June 19, 2019 at 9:00 PM UTC

By Tom Orlik

Tom Orlik is the chief economist for Bloomberg Economics. He’s the author of “Understanding China’s Economic Indicators,” a guide to China’s economic data. He’s based in Washington, DC, following more than a decade in Beijing.

Another friendly dinner won’t solve much.
Photographer: Jim Watson/AFP/Getty Images

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It’s possible a meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at next week’s G-20 summit will result in an “agreement to agree” on trade. But the chances of a more comprehensive deal appear remote. A key concept in negotiation textbooks is something called the “best alternative to negotiated agreement” -- in other words, the best outcome each party can hope for if talks fail. Trump’s “best alternative” is looking better than it was. That means the prospects for an agreement are looking worse.

A deal remains there for the taking. Both sides would benefit from a more open Chinese market with stronger protections for intellectual property. This would be an unalloyed positive for the U.S. In China, reformers would see the short-term costs as a price worth paying for a long-term increase in efficiency.