US-China tensions simmer but both say there is no trade war

Bloomberg

The US and China played down the prospect of a diplomatic breakthrough to resolve their escalating trade dispute as the White House considers what demands it will present to the Chinese.
Serious talks “have not really begun yet,” Larry Kudlow, head of the White House National Economic Council, told Bloomberg TV. Treasury Secretary Steven Mnuchin, in a CNBC interview, declined to give details about contacts between the two superpowers because doing so could reveal America’s negotiating hand.
“We haven’t yet given China a list of demands on what we want,” Kudlow told reporters at the White House. “We haven’t done that but such a list is under discussion.”
Trump instructed the US Trade Representative’s Office to consider tariffs on an additional $100 billion in Chinese imports, bringing to $150 billion the range of Chinese goods under consideration. China, which already proposed duties on $50 billion in American goods including aircraft and soybeans after the first US move, has said it will respond proportionately.
“We Chinese won’t pick fights, but if someone picks a fight, we’ll resolutely meet them head on,” Chinese Ministry of Commerce spokesman Gao Feng said at a press conference in Beijing. Chinese and US officials haven’t held talks “for a period of time” on any economic or trade issues, Gao said.
Financial markets declined on the escalating conflict.
‘A Little Pain’
President Donald Trump said any short-term pain for investors will be followed by long-term gain.
“I’m not saying there won’t be a little pain,” Trump said during an interview on 77 WABC Radio’ “Bernie & Sid in the Morning” programme.
“So we might lose a little of it but we’re going to have a much stronger country when we’re finished, and that’s what I’m all about.”
Trump has previously cited the car trade as an example of the unbalanced playing field, saying China puts a 25 percent duty on imported US cars while the US charges 2.5 percent for Chinese vehicles. He’s also asked for a $100 billion reduction in the US trade deficit with China, about a third of the total gap recorded in 2017.
Kudlow, a new hire to the president’s economic team and a committed free-trader, said Trump is in regular contact with his Chinese counterpart Xi Jinping. “Perhaps there will be some fruitful negotiations,” he said. “But I would say they have been unsatisfactory, so we will see.” The US and China are holding “back-channel discussions,” Kudlow later told reporters at the White House, without providing further details on who was involved.
Mnuchin said the US doesn’t intend to “lay out our negotiations in the public domain.” He said the government’s aim is to avoid a trade war with China, though he acknowledged that the potential for such a conflict does exist.
Some analysts have speculated the two countries could reach a detente before new tariffs take effect.