On January 20, 2025, US President Trump signed an executive order in the Oval Office of the White House in Washington, DC.
Jim Watson | AFP | Getty Images
Donald Trump’s return to the White House is expected to spark further hostilities between the United States and China. But could his love of transactional deals pave the way for an unexpected deal with Xi Jinping? Call it soy on steroids.
If history is any guide, many people are preparing for a deterioration in U.S.-China relations once Trump takes office again. After all, his first term was widely seen as a moment of a hostile turn in relations with China, and his cabinet is expected to include some of Washington’s most prominent China hawks.
Coupled with the Biden administration’s sweeping export controls and a network of alliances that echo Cold War containment strategies, U.S.-China relations are near a low point. famous investor Ray Dalio sums up the moodpredicting “an ‘America First’ foreign policy and preparations for a foreign war with China, which is seen as the biggest threat to the United States.”
Yet while relations between the two countries are likely to deteriorate further, conventional wisdom may overlook a competing, even more likely scenario: a Chinese-Chinese conflict driven by Trump’s ambition to be remembered as one of America’s great statesmen. A big deal was reached between the United States. In fact, Trump has Reportedly made a call Prior to his inauguration, “balanced trade, fentanyl, TikTok and many other topics” were discussed.
Trump, guided by his transactional thinking, views diplomacy as a series of high-risk transactions. His 2018 tariffs were more about gaining influence than a systemic economic strategy — ultimately $200 billion trade deal struck Mainly agricultural products such as soybeans.
However, Trump values his popularity above all else, and his victory strategy may include imposing punitive tariffs on Chinese imports as early as possible, or even on imports of Chinese companies operating in neighboring countries such as Mexico. That would create a pressure cooker, paving the way for negotiations with Beijing before U.S. consumers feel the impact.
The result? It was a big deal, with China offering substantial and symbolic concessions that won Trump the admiration of his base and boosted his self-image as a master dealmaker. Call it “soy on steroids.”
However, such a transaction is not without risks. While the Trump-Xi deal may bring short-term economic relief, it could alienate U.S. allies in Asia. Trump’s admiration for strongman leaders like Xi Jinping, whom he calls “Clever, fierce, intelligent” This contrasts with his disdain for democratic leaders in Japan, South Korea and Taiwan. accused of seeking protection Not paying their fair share. A purely transactional approach could fuel Beijing’s regional ambitions while undermining long-term strategic goals.
Still, Trump’s unpredictability and penchant for dramatic gestures have made a reset in U.S.-China relations possible. With the world watching, one thing is clear: Trump’s return is bound to bring surprises. “Soy on steroids” could be just the opening salvo in an unexpected geopolitical upheaval that few could have predicted.
David Bach has been Dean of IMD since September 2024 and is Nestlé Professor of Strategy and Political Economy. Before joining IMD in 2020, he served as associate dean of the Yale School of Management.
