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As the Trump administration’s March 1 deadline for a trade deal with China approaches, with another Xi–Trump summit to follow, it seems almost impossible that a comprehensive agreement will be reached in time. The likely outcome is a punt that defers tariff increases in exchange for ongoing Chinese purchases of U.S. soy and energy.

President Trump and Chinese President Xi Jinping in Beijing, Nov. 9, 2017. Photo: Artyom Ivanov/TASS via Getty Images

The broad contours of China’s current offer have become clearer:

Yes, but: The U.S. wants more structural changes. China apparently hasn’t proposed satisfactory subsidy cuts across China 2025 sectors, nor a credible commitment to scale back informal “buy China” policies. China denies that it requires technology transfers for market access, limiting what it can offer. The U.S., meanwhile, hasn’t offered to buy Huawei equipment or to stop its campaign to dissuade allies from patronizing one of China’s leading companies.

Where it stands: A modest deal that preserves the truce — marked by ongoing talks, the resumption of Chinese purchases of U.S. agricultural goods and a stay on U.S. tariff increases — remains within reach by March 1. That could provide a bridge to a longer-term deal, potentially announced with fanfare at a summit even with key details unresolved.

Between the lines: Further escalation isn’t in the short-run economic interest of either country. Increasing the current 10% tariffs to 25%, as the U.S. threatened, would reduce the purchasing power of U.S. consumers and eat into the profits of U.S. firms with China-centric supply chains. It would effectively be a $30 billion tax hike on the U.S. economy (and more if the scope of the tariffs were broadened).

The bottom line: The prospects of another extension depend on the Trump administration’s endgame — whether rolling back tariffs to maintain the current level of integration, escalating them with a big step toward economic decoupling, or simply holding on through 2020 and leaving the big decisions for a second term or a new president.

Brad Setser is the Steven A. Tananbaum Senior Fellow for International Economics at the Council on Foreign Relations.

Go deeper

38 mins ago - Health

CDC prepares tougher testing rules for international travelers

Travelers with their luggage arrive at a COVID-19 testing location at the airport in Los Angeles, Calif., on Nov. 23, 2021. Photo: Frederic J. Brown/AFP via Getty Images

The Centers for Disease Control and Prevention said Tuesday night that it is working to impose stricter testing requirements for international travelers due to the spread of the new Omicron variant.

The big picture: The new rules would require all international travelers, regardless of vaccination status, to show a negative test taken a day before their flight to the U.S. Currently, the CDC says fully vaccinated travelers are allowed to show a test taken no more than three days before their departure, AP reports.

Republicans threaten to shut down government over vaccine mandates

Sen. Mike Lee (R-Utah) in the Capitol in November 2020. Photo: Joshua Roberts/Getty Images

Conservative Republicans in the House and Senate are planning to force a government shutdown Friday to deny funding needed to enforce the Biden administration's vaccine mandates on the private sector, according to Politico.

Why it matters: Congress has until the end of the week to pass a stopgap measure to extend funding into 2022, though objection from a small group of Republicans could shut down the government.

Electric car prices could go up before they come down

Illustration: Eniola Odetunde/Axios

The secret to affordable electric vehicles is cheaper batteries. But after years of falling prices, battery costs are now headed in the wrong direction.

Why it matters: Costlier batteries could drive up the price of electric vehicles — threatening the auto industry's transition away from fossil fuels, and, in turn, society's fight against climate change.