China trade rift could squeeze growth and hurt consumers

Hamburg University's Flassbeck Says Trump Opened a New Era on Trade

Trump says he and Chinese President Xi Jinping "will always be friends, no matter what happens with our dispute on trade". "China will take down its Trade Barriers because it is the right thing to do", the United States president tweeted.

"Taxes will become reciprocal & deal will be made on Intellectual Property".

Trump escalated the dispute late Thursday by instructing the U.S. Trade Representative's office to consider tariffs on an additional $100 billion in Chinese imports, raising to $150 billion the amount of Chinese goods under consideration.

Trump increased levies on Chinese imports last week over allegations China has been ripping off USA technology for its own gains.

But the response from the White House on Sunday was mixed on how the USA was actually settling its bad blood with China.

"We do have constant communication with them", chief economic adviser Larry Kudlow said on "Fox News Sunday".

As fears that a full-fledged trade war could run wild, the president seems to expect China to eventually sit down and negotiate a deal.

Susan Aaronson, a George Washington University professor of global affairs who specialises in digital trade, said that as American firms battle for supremacy in artificial intelligence, they are hungry for sources of data, including from China. The Trump administration has said it is taking action as a crackdown on China's theft of USA intellectual property.

Trump upped the ante last Thursday by threatening to put $100 billion duty on more Chinese imports. They suggested the trade dispute may be resolved through negotiations and that the "process may turn out to be very benign", according to Kudlow. The US bought more than $500bn in goods from China past year and now is considering penalties on some $150bn of those imports. China's retaliation so far has targeted Midwest farmers, many of whom were bedrock Trump supporters.

Kudlow, who started his job a week ago after predecessor Gary Cohn quit over the tariffs plan, noted that none of the USA moves have gone into effect and downplayed the possibility of economic repercussions.

On the other hand, over prior weeks Mohammed El-Erian and Martin Feldstein had argued that what mattered was not trade deficits but getting China to respect intellectual property rights, which in the longer term could bring about a better global trading system.

But another top White House economic adviser, Peter Navarro, took a tougher tack, declaring China's behavior "a wake-up call to Americans".

Treasury Secretary Steven Mnuchin declined to comment on the substance of trade talks with China during an interview on CBS' "Face The Nation".

Nevertheless, he also said he would back resorting to tariffs if talks with Beijing failed. He argued that the situation could be a "win-win" for China and the United States if Beijing opens up its economy.

"We continue to be a country that benefits hugely from multi-lateral trade agreements that always has argued against situations where we might have tariff wars".

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