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The writer is president of IMD Business School.

Conventional wisdom surrounding Donald Trump's return to the White House suggests a bleak outlook for U.S.-China relations. The trade war during his first term marked a turning point with Beijing, and his new cabinet will likely include some of the biggest China hawks in memory. If we add the intensified measures against China by the Biden administration, the picture appears bleak. Renowned investor Ray Dalio recently predicted that the new administrations' foreign policy America First will include active preparations for war with China.

Yet this narrative overlooks a more intriguing possibility: the emergence of a big U.S.-China deal, spurred by Mr. Trump's transactional instincts and desire to secure a legacy as a great American statesman. Although further deterioration in relations is possible, and perhaps the most likely outcome, Mr. Trump's unique approach to global governance suggests an alternative path that few are considering.

Ideological to transactional

Joe Biden's approach to China was ideological while remaining rooted in realpolitik, portraying the rivalry as a struggle between democracy and authoritarianism. Initiatives such as semiconductor export controls and strengthening alliances aimed at countering Beijing's global influence are reminiscent of US diplomat George Kennan's Cold War containment strategy, as they sought to safeguard the technological, economic and military supremacy of the United States.

Mr. Trump, by contrast, operates with a transactional mentality. Its tariffs against China in 2018 had less to do with systemic rivalry than with mercantilist instinct and a desire for leverage. His government ultimately struck a deal in which it lowered tariffs in exchange for China's commitment to buy $200 billion worth of U.S. products, including soybeans, a move intended to appeal to the rural voting base. of Mr. Trump. His rhetoric, which alternates between praising Chinese President Xi Jinping as brilliant and intelligent and berating him, reveals a leader more interested in transactional outcomes than strategic positioning.

Read more about the next White House:

The case for a big deal

Mr. Trump's admiration for strong leaders like Mr. Xi contrasts sharply with that of the Democratic leaders of Japan, South Korea and Taiwan, whom he criticizes for not paying enough for American military protection. This contempt could prompt him to prioritize a bilateral agreement with China. It is telling that Mr. Trump invited Mr. Xi to his inauguration, even though no foreign head of state has attended the event since the State Department began keeping records in 1874.

How could such an agreement come about? While Mr. Trump called tariff the most beautiful word in the dictionary, economists estimate his proposals would cost the average American household $2,600 per year.

We know that Trump values ​​his popularity more than anything else. Therefore, a winning strategy could see him impose punitive tariffs on Chinese imports early in his term, as well as Chinese companies' imports from neighboring countries like Mexico, and then quickly begin negotiations with Beijing before American consumers feel the impact. An ensuing grand deal, in which China made a mix of meaningful and symbolic concessions, would win Trump the adulation of his supporters, cementing at least in his eyes and their eyes his status as a great statesman. Think of it as soy on steroids.

For Beijing, an American agreement has strategic advantages. China's economy faces growing challenges, including a real estate crisis and a decline in foreign investment. Mr. Biden’s U.S. tariffs and export controls have added to those pressures. A grand deal could ease economic tensions while allowing Mr. Xi to claim a diplomatic victory, particularly if the new arrangement is better than the current status quo.

Of course, every trade has losers. And if this comes to fruition, they will likely be the Americas' traditional allies in the region, such as Japan, the Philippines, South Korea and Taiwan. The logic of America First foreign policy dictates that, having achieved what Mr. Trump and his team would no doubt present as an American triumph, the transactional statesman-in-chief can turn his back on Asia and concentrate elsewhere.

The art of the transaction

If Mr. Trump's political career has taught us anything, it's to expect the unexpected. Its transactional diplomacy and willingness to challenge conventional wisdom make an agreement between the United States and China plausible. This would serve his personal ambitions and China's strategic interests, but raise serious questions about its long-term impact on global stability.

As the world prepares for the next chapter in U.S.-China relations, one thing is clear: If there is a big deal to be made, Mr. Trump will accept it, regardless of its impact on allies of the Americas or on the world order. And it’s easy to see the Make America Great Again movement and much of the isolationist American public praising the statesman Mr. Trump. If I were the Chinese Foreign Ministry, I would already be at work.

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