Former prime minister Kevin Rudd is confident the United States and China will reset their trade negotiations at an upcoming G20 summit in Japan.
Mr Rudd, who heads up the Asia Society Policy Institute in New York, says there is currently a 50/50 chance of the two nations striking a deal as their trade war wages on.
That comes as Beijing has made clear there are several areas in the negotiations where it refuses to move, with US President Donald Trump digging in on the other side.
"The degree of political difficulty has gone through the roof," Mr Rudd told ABC TV on Thursday.
But the former leader expects the two nations' economic interests will force them back to the negotiating table.
"I still however have a funny feeling that the underlying economic interests of both countries will push them in the direction of some form of agreement when they meet at the Osaka G20 summit coming up soon," he said.
"I expect that what we will see is both sides agreeing to...reboot the negotiations and maybe there's a deal that can be done."
Even if a deal is struck, Mr Rudd fears the two countries being increasingly unwilling to share technology which could contribute to a further economic decoupling.
"If that happens, we find ourselves as third countries like Australia in an increasingly invidious position."
Mr Rudd's comments come as Prime Minister Scott Morrison has recently ramped up his focus on the Pacific region.
The former prime minister believes the coalition should have taken that approach far earlier.
"I wish the conservatives would understand a basic principle, that Australia's foreign aid delivery is not an exercise in pure philanthropy on Australia's part, although it is the right thing to do," he said.
"It is also underpins Australia's long term strategic interests in the southwest Pacific and in southeast Asia.
"That is where they have dropped the ball fundamentally on aid delivery levels over the past six years."