• Both sides have made gestures of goodwill this week, but the US government's blacklisting of Chinese tech companies, sanctioning of Chinese officials, and exploration of ways to reduce China's access to capital markets make a full-blown deal seem unlikely.
  • Trump may not even want a trade deal, because if China meets its demands, more American jobs and capital could flow to China.
  • Apple and the NBA's reversals on Hong Kong this week also underline the enormous difficulty of ending the trade war.
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Donald Trump said there's a " really good chance " of a US-China trade deal ahead of high-level talks between the world's two biggest economies, which kick off today.

But some conciliatory gestures from both countries this week mask bigger problems ahead. Clashes between the US and China this week, Apple and the NBA's reversals on Hong Kong, and the two countries' broader relationship make a deal seem unlikely.

Some goodwill, but huge snags remain

On the face of it, tensions appear to be softening.

China this week was reported to be open to a partial deal and has offered to buy more US soybeans. And Trump reportedly signed off on approving licenses that would let some US companies do some business with Huawei, after blacklisting the Chinese telecoms titan in May on national security concerns .

But China's negotiators intend to adopt a tougher stance and stop short of offering reforms to industrial policy or state subsidies, Bloomberg reported earlier this week.

And Trump could abruptly end the talks if he thinks China is trying to capitalize on either his possible impeachment, or a looming slowdown in the US economy.

Relations between the two nations have also soured in recent days. The US government blacklisted 28 Chinese entities including video surveillance giant Hikvision and artificial intelligence startup SenseTime over their alleged involvement in China's violation of the human rights of Muslim minorities.

Then there are Trump's visa bans on Chinese officials, exploration of ways to limit China's access to US capital markets, his threats to curtail US investment in China, and China's hints at retaliation .

A trade deal could actually hurt America

There are signs left and right that the trade war is hammering the US, Chinese, and global economies. Trump seemingly has every incentive to get the global economy back on track.

But, in an odd twist, a deal to end the war wouldn't necessarily help the US. It might even hurt it.

In a recent episode of "The Weeds" podcast , host Matt Yglesias highlighted several reasons why the US may not want a trade deal:

  • Trump demands the Chinese cease forcing American companies to hand over technology and enter joint-venture agreements with Chinese-owned companies, and tackle industrial espionage against US firms. But if China says OK and does what Trump wants, more capital and jobs could flow to China.
  • Trump has bemoanedChina's trade deficit with the US and wants China to buy more farm goods, pharmaceuticals, airplane parts, and other American products. However, the US doesn't necessarily want to sell some items such as high-tech military equipment to China. If not structured carefully, a trade deal could mean that China exports even more goods to the US without importing more American goods. That would widen the trade gap.
  • De-linking the Chinese and US economies may be seen as a big win for the US, but wouldn't be a resolution. Companies like Apple would just shift their supply chains from China to Vietnam or elsewhere.

Apple and the NBA show Hong Kong is a flashpoint

Mass protests in Hong Kong are complicating the US-China trade talks.

China is keen to halt the disruption in the semi-autonomous region, but many Americans view the feud as a fledgling democracy resisting authoritarian control. A bill intended to defend Hong Kong's freedoms and combat Chinese overreach is moving through Congress. Trump could alienate the Chinese if he signs it.

After criticism from Chinese state media, Apple this week pulled an app that Hong Kong demonstrators use to track police activity, the Wall Street Journal reported . It can hardly afford to alienate the Chinese government Apple got $52 billion, or a fifth of total sales, from China, Hong Kong, and Taiwan last financial year .

And then there's the NBA, reeling from Chinese fury over comments made by Houston Rockets' general manager Darly Morey supporting protesters in Hong Kong . China suspended broadcasts of NBA games, while Chinese companies piled on, slamming Morey or halting business with the league, according to Bloomberg .

Apple and the NBA's differing approaches are emblematic of the US-China relationship: America is constantly walking the line between deferring to the Chinese government to keep it on-side and maintain access its markets, and defending its core values of free speech and democracy at the risk of provoking swift, broad backlash.

A deal remains a long shot

The US government doesn't want to return to the status quo before the tariffs, while China is reluctant to change the policies that have allowed its economy to mushroom in recent decades, simply to satisfy Trump's demands. The two nations' fundamentally different goals combined with recent spats, complex politics, big egos, and enormous stakes mean a deal to end the trade war remains a long shot.

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