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The Next Phase of Trump’s Trade War with China

China remains committed to its 40-year-old process of reform and opening up. But following through on this commitment will require China's leaders to find ways to manage escalating tensions with the US and avoid a costly – and potentially devastating – reconfiguration of the global economy.

BEIJING – US President Donald Trump and Chinese President Xi Jinping may have agreed at the G20 summit in Osaka to resume trade negotiations, but the path to ending the trade war remains far from clear. After all, the two leaders reached a similar agreement at the previous G20 summit – in Buenos Aires last December – and those talks ultimately failed, not least because Trump mistook China’s conciliatory attitude for weakness.

Whether Trump makes the same mistake this time remains to be seen. In any case, it is worth considering how the trade war might unfold over the coming months and years – and what China can do to protect itself.

Import tariffs may, for the foreseeable future, remain steady – neither escalating further nor being rolled back. The agreement in Osaka kept Trump from following through on his threat to impose additional tariffs on $300 billion worth of Chinese exports. But it did nothing to reverse past measures, such as the 15-percentage-point tariff hike, to 25%, on $200 billion worth of exports that the Trump administration implemented after the last round of talks broke down in May.

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