President Trump hosted Chinese President Xi Jinping at Trump’s private residence in Florida last week and this marked the first time the two leaders have met.
While there were enormous expectations going into this first encounter between two of the most powerful leaders in the world, this was in fact an informal meeting and not an official state visit. It was designed for the two men to get to know each other in a more informal and casual setting. It was not at the White House but at Trump’s private residence Mar-a-Lago.
It did however begin to set the tone for US-China relations and trade going forward. The main issues discussed were economics, trade, security, law enforcement, and cyber security.
What can we learn from this meeting as small business entrepreneurs and Amazon sellers who source product from China and sell into the US and other markets?
First off, Trump definitely has China on his mind. No past US president has met with his Chinese counterpart so early in his presidency. In fact looking back while Clinton was president during a relatively strong period of Sino-US relations, Clinton didn’t meet with the Chinese President until year two of his presidency.
Trump meanwhile met with President Xi within his first several months of his presidency. So clearly the US-China relationship is high on his list of priorities.
Secondly, from the Chinese perspective, China’s number one goal going into this meeting is to avoid a trade war and a major crisis with the US.
As you may remember, during his campaign before taking office, Trump had made accusations of China stealing jobs, being a “currency manipulator”, and even “raping” the US. Trump threatened a 45% import duty on all Chinese imports in Jan 2016.
So China would like to reset the dialogue between the two countries. It would like to refocus from a zero-sum game to opening up new US-China dialogues on the issues at hand.
So what are the outcomes from the meeting?
The main takeaway is the agreement on the 100-day plan. What will happen in the next 100 days? Well it’s a plan to have a plan.
It does sound vague but the idea is for the US and China to develop an agenda in order to incrementally rebalance trade between the two countries. This doesn’t necessarily mean to cut down trade from China but possibly to increase and allow more US imports to China.
Take for example US beef imports into China. There has been talks of China lifting the ban but as of today, it still has not happened. In my purely unscientific research while shopping in the supermarkets of Shanghai, I’ve searched high and low for a juicy American cut of rib-eye steak but no luck!! The market is dominated by Australian beef which is very expensive (and not as good in my opinion).
But the important thing is that there will not be a trade war in the next 100 days. I do not expect tariffs to be increasing substantially any time soon which is good news for Amazon sellers sourcing product from China. You’re import costs will not be spiking in the near future so you’re safe for now.
Since taking office, Trump’s tone has softened on China as the US’s attention has been embroiled with problems North Korea and more recently in Syria and the Middle East.
In my opinion, the US cannot afford to go into a trade war in China right now given the other more immediate problems at hand. So this meeting will be a stepping stone to rebalance trade between the two countries and agree to begin working on an economic plan.
Moreover the second takeaway is the beginning of a relationship or “Guan Xi” between President Xi and President Trump. In China building better relationships builds better business. In fact without a relationship it’s next to impossible to get anything done. This principle was clearly evident since the format of the meeting was a casual one and held at Trump’s private home (and not a formal one at the White House).
This is similar to business meetings in China held over the dinner table rather than a conference table. The two sides must first get to know each other and learn who they are dealing with first before they can discuss any serious business. And most often this is done in an informal setting. Without this important step, I wouldn’t expect any substantial outcomes to be reached whether it’s negotiating business or personal relationships.
And Trump is clearly aware of importance of the relationship in the “Art of Making a Deal”. In fact Trump has shown Xi and First Lady Peng tremendous American hospitality by inviting them to his residence.
Moreover, in a bit of “Sound of Music” diplomacy, First Granddaughter Arabella even sang a traditional Chinese song in Mandarin to President Xi and the First Lady during their visit. Trump definitely knows Guan Xi!
After the meeting Xi has invited Trump to visit China which Trump has accepted. And Trump feels that has developed a friendship with the Chinese leader.
Overall I feel positive from this initial meeting because it does set the right tone for a more constructive US-China relationship.
And perhaps more importantly, I don’t expect a trade war to breakout any time soon which is good news for everyone.
The Chinese have a saying: “After 100 days you can predict the next 1,000 days”. We shall see as we move forward into this critical period in US-China relations and how it affects our businesses.