May 20, 2019

Why China and the U.S. Can't Work It Out

“CANBERRA – Trade negotiations between the United States and China have broken down because the US government says the Chinese were walking back their agreement on matters that had previously been addressed. US negotiators and President Donald Trump were furious, and on May 10, Trump more than doubled US tariffs on $200 billion worth of imports from China. The lead Chinese negotiator, Liu He, told reporters that, because a final agreement was not reached, revisions were not “walked back,” a line that the US side does not seem to buy. The Chinese government has now retaliated, announcing that it will raise tariffs on $60 billion worth of US goods.

These latest developments cast fresh doubt on prospects for a successful conclusion to the US-China trade negotiations. Although it is hard to pinpoint the exact cause of the breakdown in talks, I suspect a clash of negotiating norms and styles may have played a role, in addition to differences on substance.

In an Executive MBA course on the Chinese economy that I have taught at Columbia Business School for the past ten years, we do a mock negotiation between a US and a Chinese team. We then discuss how norms and styles of negotiation may differ across cultures. One takeaway from this session is that some differences in norms of which the two sides are unaware can cause talks to break down.”

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