US President Donald Trump shakes hands with Chinese President Xi Jinping in Beijing's Great Hall of the People in a file photo. Photo: AFP / Fred Dufour

There is no longer any question that both US President Donald Trump and Chinese President Xi Jinping want an end to the trade war that has weighed on global trade and business investment and still threatens to drag the two superpowers into economic recession.

“We’re getting to the point where it’s clear that both governments want a deal. The presidents want a deal, and they need to get through the end-game issues. This is a critical week,” the US Chamber of Commerce’s head of International Affairs, Myron Brilliant, told reporters this week.

Expectations are high that the two sides are close to a deal and that the latest round of negotiations, which began in Washington on Wednesday, may be the final step before Trump and Xi meet to sign on the dotted line.

But both leaders are facing hard decisions on what has emerged as the last major unresolved issue in the talks. The question of how to enforce terms of the agreement presents a fundamental dilemma for negotiators, with both sides taking seemingly irreconcilable positions.

US Trade Representative Robert Lighthizer has said that one acceptable mechanism to enforce a deal would allow the United States to unilaterally impose new tariffs on Chinese goods if Beijing does not make good on the terms of an agreement. Under this proposal, China would not be allowed to impose retaliatory tariffs.

Top Chinese officials have stated unequivocally that such an arrangement is untenable, and that any mechanism must go both ways. But the primary US concession of a potential deal is expected to be the immediate or phased lifting of tariffs. Imposing new duties as part of enforcement would, therefore, be in itself a breach.

Observers have gone so far as to compare the US proposal to coercive policies imposed on Beijing by European colonial powers and Japan during China’s “century of humiliation.” From a domestic political standpoint, Chinese officials must strike a delicate balance between giving Trump enough headline concessions to sell at home in a crucial election cycle, while avoiding the appearance of total capitulation in the face of tactics some see as an attempt to contain China’s rise.

The clearest room for a compromise, a proposal that is reportedly being discussed in the talks this week, is to create a timeline for a phased lifting of US tariffs on Chinese imports in concert with following through on Chinese pledges.

White House economic adviser Larry Kudlow chimed in several times on the progress of the talks this week, saying that the Trump administration expected “headway,” and that the talks could be extended into the weekend.

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