As President Trump prepared to meet with Chinese President Xi Jinping at the G-20 summit in Osaka, Japan, most American analysts were focused on whether Trump would make a trade deal with China or play hardball and be willing to walk away from a deal.

Importantly, some incorrectly assumed that Xi was ready to make a trade deal with the U.S. Few asked, what if Xi wanted a trade deal, just not with this president? If Xi would rather deal with one of the Democratic contenders who debated in Miami, Xi would eschew a trade deal with Trump or at best agree to a truce.

While the eventual truce was celebrated by equity markets, the reality is that the billions of existing tariffs Trump already placed on Chinese goods remained in place as well as their negative effects on near-term U.S. economic growth.  Despite kicking the trade can down the road, nothing was resolved and if anything, President Trump’s weak bargaining position was highlighted by his reversal on Huawei and backing off of additional tariffs despite apparently gaining nothing.

The reality is that Trump’s leverage in negotiations with China is declining everyday we move closer to the 2020 election.  The second reality is that trade agreements have historically been more about foreign policy than about trade and if China’s president would rather try his luck in 2021 with one of the Democratic contenders, Trump will not get a trade deal.  This would be a significant headwind to his reelection bid as the economy is already slowing materially.  Trump is painfully aware of this as evidenced by the fact that he reportedly explored demoting the Federal Reserve chairman.

Employment growth, while still expanding, has decelerated, significantly falling from an average of 223,000 jobs per month in 2018 to an average of 164,000 jobs so far in 2019.

The manufacturing sector, a critical part of Trump’s base, is approaching contraction. It now stands at its lowest reading in nine years, according to the IHS Markit manufacturing Purchasing Managers index.

Business confidence is also waning. According to the most recent Duke Fuqua survey nearly 50 percent of CFOs believe the U.S will be in a recession by the second quarter of 2020. Whether or not they are correct, their pessimistic views will surely further temper what is already slowing hiring and business investment, constraining the employment and economic growth upon which incumbent presidents depend for reelection.

Then there are the U.S. financial markets. The 10-year Treasury rate is quickly heading toward 2 percent, causing the closely watched spread between 10-year and 3-month Treasury rates to invert. This has led many to wonder if a recession is on the horizon. Meanwhile, equity markets remain in a state of heightened angst, hanging on every presidential trade war tweet.

As the 2020 presidential election rapidly approaches, Trump needs a trade deal with China, or at least a truce until after the election. Xi knows this, which is why Xi got concessions on Huawei and a delay  of additional tariffs while Trump seemingly got nothing of real substance.  Looks like factors other than trade once again trumped trade negotiations.