Reckoning in US-China ties looms as Trump prepares to take office

Watching all this across the Pacific will be the same adversary Donald Trump faced in 2017, husbanding an economy that is weaker by all accounts. Can President Xi Jinping, shaken by a property meltdown and ebbing foreign investment, call his bluff?

Donald Trump says "tariff" is the most beautiful word in the English language. But he is not letting on how complicated the process really is.

To enact the across-the-board 20 per cent tariff he has in mind, he will likely need to declare a national security emergency on trade.

A tariff on China is another matter. Trump can draw authority from investigations into China's trade "misbehaviour" and make a snap announcement that might have taken a year to produce in his first term.

He will find support from the Republican-dominated Congress and an array of hawkish think tanks, which have offered their own road maps for rescinding China's permanent normal trade relations (PNTR) status and erecting a new tariff structure to kill off any dependence on China.

If there is to be an economic divorce, the prenups are ready.

The argument that his administration will marshal could go something like this: For over two decades, China has played the World Trade Organisation (WTO) like a fiddle. It has not kept its promises to be open, fair and reciprocal.

In this telling, Chinese President Xi Jinping has perfected a mercantilist trade policy with tax cuts, hidden subsidies and a cheap renminbi designed to dominate economically. And a wronged America is dealing with de-industrialisation and dependence on supply chains steered by a hostile adversary.

That is the premise behind a Bill to end China's PNTR, introduced in November by Senator Marco Rubio, Trump's nominee for secretary of state. It arms Trump with what he needs - leverage in trade talks with China.

If the Bill is passed by the incoming Congress in January, which looks likely, China will no longer merit the non-discriminatory treatment accorded to the other 165 WTO members. It will dissolve the unconditional most-favoured-nation status for Chinese imports, leaving Trump free to apply whatever tariff rates he likes.