Hopes that the latest round of trade talks between the United States and China would yield a quick bounty were dashed when they concluded without resolution Wednesday. While the discussions were described as "constructive," both sides appear to be digging in. The difficulty of resolving the problem is compounded by domestic politics and geopolitical tensions that weigh on decision-makers. The world must brace for continuing acrimony between the two largest economies, and its likely spillover.
U.S. President Donald Trump is convinced that China is an unfair trader that has stolen U.S. jobs and intellectual property. He believes that the solution to that problem is unilateral U.S. pressure. He imposed tariffs on $250 billion worth of Chinese imports and has threatened more if Beijing does not change its policies and balance its trade accounts with the U.S. On Thursday, he tweeted that he intends to impose 10 percent tariffs on $300 billion more worth of Chinese imports, effective Sept. 1. Trump is not only confident that the U.S. would prevail in a trade war, but that such a conflict will be easy to win.
China has proven more stubborn than Trump reckoned. It responded to his tariffs with sanctions of its own on $110 billion of U.S. products. Beijing insists that any trade deal be preceded by the lifting of U.S. sanctions, a demand Trump rejects because he does not want to lose leverage. Talks have been deadlocked as a result.