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The Deal Trump Should Strike With Xi

Focus on Investment, Not Trade, at the G-20

U.S. President Donald Trump takes part in a welcoming ceremony with Chinese President Xi Jinping in Beijing, November 2017.  Damir Sagolj / REUTERS

Chinese President Xi Jinping will go to the G-20 Summit in Buenos Aires at the end of November with one thing on his mind: defusing the trade war with the United States. That means striking a deal, and U.S. President Donald Trump is in a strong bargaining position. The current tit-for-tat tariffs hurt China more than they do the United States. The Chinese economy is more dependent on the United States than the U.S. economy is on China. The prospects for the U.S. economy look very good; there are growing storm clouds above the Chinese economy. In sum, advantage America. But what kind of deal should Trump push for?

The problem for Trump is that Xi cannot give him what he says he wants: an immediate and dramatic reduction in the U.S. trade deficit with China. Trump will probably get some guarantees to buy more U.

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