U.S. President Donald Trump and Chinese President Xi Jinping met briefly in South Korea last month, leading analysts to conclude that the resulting trade deal primarily restored previous conditions rather than achieving significant progress. This outcome is seen as a setback for Trump’s protectionist policies.

Experts note that the United States has historically thrived as a largely free market economy, while China operates under a government-controlled economic model. The current U.S. administration, like its predecessors, has attempted to impose tariffs and trade restrictions, but analysts argue that this approach plays into China's strengths.

Scott Lincicome, a trade expert at the Cato Institute, stated, "Recent U.S. isolationism has helped tilt the global balance of power toward China and away from the United States." He emphasized that despite the size of the American market, the U.S. holds a relatively small share of global trade, limiting its ability to reshape the international economic landscape.

The recent agreement appears to involve China suspending export controls and retaliatory tariffs that were enacted in response to U.S. tariffs. In exchange, the U.S. is expected to reduce its own tariffs. Lincicome described the terms of the deal as a temporary return to the status quo of summer 2025, rather than a comprehensive resolution to ongoing trade issues. He also pointed out that the agreement undermines Trump’s goal of shifting manufacturing away from China to more U.S.-friendly countries.

Lincicome noted that tariffs on China are now only slightly higher than those on countries that were intended to benefit from Trump's trade policies. He remarked, "China now faces tariffs only slightly higher — or in India’s case much lower — than those facing the countries that were supposed to benefit from Trump’s alleged China hawkishness."

Commentators from various outlets have suggested that Xi Jinping emerged from the meeting with a stronger position. Both CNN and the New York Times characterized Xi as the clear winner in the negotiations.

China's authoritarian government, led by the Chinese Communist Party, allows Xi to implement trade policies without the need to answer to voters or face legal challenges. This gives him a significant advantage in raising trade barriers and managing economic aspects that are typically left to market forces.

Trump has positioned himself as a proponent of the “American system,” which includes high tariffs and government-directed economic initiatives. However, historical analysis suggests that this system has not been as effective as its proponents claim.

Peter Andreas, a professor at Brown University, noted in his 2014 book that high tariffs in the U.S. have often led to increased smuggling and undermined protectionist policies.

In addition to tariffs, Trump has shown interest in partial government ownership of key industries, targeting companies such as U.S. Steel and Intel. However, analysts argue that this approach, described as a form of Republican socialism or mercantilism, is unlikely to compete effectively with China's state-directed economy.

As the U.S. navigates its trade relationship with China, the implications of these recent developments continue to unfold, raising questions about the future of American trade policy and its global standing.