The trade war has been fought to a standstill and won't go away, with a truce in place but little chance of a breakthrough. The US foreign policy establishment is focused on how to contain China rather than compete with it, amplifying bilateral tensions. China-bashing will feature prominently in the US presidential campaign, and an already China-skeptical Trump will have mixed intentions and limited capacity to stop his administration from taking tough action against China on national security and foreign policy issues.
Furthermore, Hong Kong's political crisis will persist, while Taiwan's January 2020 vote will likely see a reelection of Beijing's foe Tsai Ing-wen, bolstered by stronger nationalist sentiment within the population. The United States will emphasize military and diplomatic support for Tsai's regime and at least moral support for Hong Kong's protesters (driven by Congress), prompting angry objections from Beijing over interference in its domestic affairs.
As a consequence, the US will take tough measures against China, including financial sanctions (over Xinjiang, Iran, Hong Kong), designation of officials, technology controls, and efforts to limit US capital flowing to Chinese firms. These actions will also create tail risks for an already softening Chinese economy. Meanwhile, China will punish US and other foreign firms viewed as supporting Washington's “containment agenda.” The “unreliable entities” list will grow longer, and China will continue to restrict space for foreigners by reducing their ability to get visas. The politicization of China's economic relationships will intensify as Beijing looks for ideological “outlets” to vent over an aggressive Washington and slowing economic growth at home.
Meanwhile, as Trump faces a challenging reelection campaign, Xi may test Trump's willingness to push back aggressively in areas such as Hong Kong and Taiwan, sensing that while trade matters for Trump, he is less interested in security questions. That's dangerous, because the US president is unpredictable.