WASHINGTON (AP) — The Trump administration and China are facing growing pressure to blink in their six-month stare-down over trade because of jittery markets and portents of economic weakness.
The import taxes the two sides have imposed on hundreds of billions of each other’s goods — and the threat of more to come — have heightened anxiety on each side of the Pacific. The longer their trade war lasts, the longer companies and consumers will feel the pain of higher-priced imports and exports.
Their conflict is occurring against the backdrop of a slowdown in China and an expected U.S. slump that a prolonged trade war could worsen — a fear that’s weighing on financial markets.
“The U.S. and China now have a strong shared interest in striking a deal in order to halt the downward spiral in business and investor confidence, which have taken a beating in both their economies,” said Eswar Prasad, professor of trade policy at Cornell University.
The economic threats, agreed Wang Yong, an international relations specialist at Peking University, “might be conducive to negotiations” by nudging Beijing toward market-oriented changes long sought by
the United States.
Trump has long complained about America’s gaping trade deficit with China: The gap between what Americans sold and what they bought from China in 2017 amounted to $336 billion and will likely be higher in 2018. But the dispute goes far deeper than lopsided exports and imports. It’s fundamentally a high-stakes conflict over the economy of the future.
The U.S. accuses China of deploying predatory tactics in a drive to surpass America’s technological supremacy. On top of concerns about collateral damage from the U.S.-China trade war, investors in the U.S. markets are worrying about rising interest rates and a wobbly U.S. real estate market.