This prediction market addresses whether former President Donald Trump will negotiate and implement a new free trade agreement with China during a potential second term in office, concluding by January 20, 2029. The question centers on whether the existing Phase One trade deal, signed in January 2020, will be replaced or significantly expanded into a more comprehensive bilateral trade pact. The outcome depends on complex diplomatic negotiations, domestic political will in both countries, and the broader strategic competition between the United States and China. Interest in this topic stems from the profound impact such an agreement would have on global supply chains, tariffs, and the economic relationship between the world's two largest economies. During his first term, Trump initiated a trade war with China, imposing tariffs on hundreds of billions of dollars worth of goods. His campaign rhetoric for the 2024 election has included promises to impose even higher tariffs, but also hints at potentially negotiating a new deal. Observers are divided on whether his aggressive tariff strategy is a permanent policy or a negotiating tactic to secure a more favorable agreement. The market reflects uncertainty about whether a return to the White House would mean escalation or resolution of the ongoing trade tensions.

Historical Context

Modern U.S.-China trade relations were fundamentally shaped by China's accession to the World Trade Organization (WTO) in 2001. This granted China permanent normal trade relations status with the U.S., leading to a massive increase in bilateral trade but also growing U.S. trade deficits and complaints about intellectual property theft and forced technology transfer. The Obama administration pursued the Trans-Pacific Partnership (TPP), partly as a strategic counter to China, which Trump withdrew from in 2017. The defining recent precedent is the trade war initiated by President Trump in March 2018. Citing an investigation under Section 301, the U.S. imposed tariffs on approximately $50 billion worth of Chinese imports, triggering retaliatory tariffs from China. This escalated through 2018 and 2019, with the U.S. imposing tariffs on over $350 billion of Chinese goods. After prolonged negotiations, the two sides signed the "Economic and Trade Agreement" (Phase One) in January 2020. This deal committed China to purchasing an additional $200 billion in U.S. goods and services over 2020-2021 and included pledges on intellectual property and financial services. However, it did not address core U.S. grievances about China's industrial subsidies and state-led economic model, and China fell short of its purchase commitments. The Biden administration largely maintained these tariffs while shifting focus to allied coordination and investment controls.

Frequently Asked Questions