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Conflicting policyviews within the Trump trade negotiating team seen as reason for failing to achieve a breakthrough in trade war with China.
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Conflicting policyviews within the Trump trade negotiating team seen as reason for failing to achieve a breakthrough in trade war with China.

Attempt to control escalating trade war with China fails

South Dakota Ag Connection - May 7, 2018

WASHINGTON, DC - Top economic advisers are returning home from Beijing with little more than glaring proof of how far apart the U.S. and China are on trade issues. A U.S. delegation led by Treasury Secretary Steven Mnuchin wrapped up two days of negotiations with Chinese economic officials on Friday, mAY 4, 2018  with little more than an agreement to keep talking. No time or place for further discussions was announced, with Trump's threat to impose tariffs on as much as $150 billion in Chinese goods still looming.

According to Bloomberg, the two sides appear to be at loggerheads, with both making a long list of demands the other won't meet, analysts say. Trump wants China to cut its annual trade surplus with the U.S. by at least $200 billion by the end of 2020 and not retaliate against U.S. tariffs. China wants the U.S. to stop an investigation into the country's acquisition of sensitive American technologies.

Eswar Prasad, a China expert at Cornell University predicts, "We're going to see the trade tensions if anything flares up even more because it has become clear that the U.S. wants a great deal from China and expects China to capitulate, and the Chinese are up for negotiation, not capitulation."

While a cure-all deal was always a long shot, the discord between the world's two biggest economies means skittish global markets will continue to face ongoing trade tensions. The immediate question is whether the U.S. saw enough progress to delay planned tariffs on between $50 billion to $150 billion of Chinese imports.

"My people are coming back right now from China," Trump said Friday in Washington. "We will be doing something one way or the other with respect to what's happening in China. Let me say this: I have great respect for President Xi, that's why we're being so nice, and we have a great relationship, but we have to bring fairness into trade between the U.S. and China, and we'll do it."

Investors will probably conclude that "it's harder to get a deal than many market participants might have thought a week or a month ago," Kevin Warsh, a former Federal Reserve governor, said on Bloomberg TV on Friday.

There's a risk of a fight between the U.S. and China "ending up with a broader fight in the G-20, and that could have real effects on global supply chains, asset prices and the global economy," Warsh said.

Experts had expressed doubts about the ability of Trump's team to make a breakthrough, given the different policy views within the large U.S. delegation.

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