Analysts expect modest outcome from trade talks

Associated Press

WASHINGTON

When Treasury Secretary Steven Mnuchin leads a delegation of American officials to Beijing next week, few analysts expect them to defuse a smoldering trade conflict with China.

Rather, the likeliest outcome is a more modest one: that the talks could produce a delay in the series of damaging import tariffs the two nations have threatened to impose on each other’s goods.

The underlying frictions that have flared between the world’s two largest economies will take much longer to resolve, government officials and China experts say.

At stake are more than the American manufacturing jobs President Donald Trump vows to protect. Rules that could determine which countries and which companies will dominate the tech, transportation and pharmaceutical industries for years to come are at issue. So is the state of the global economy: Any prolonged trade war would almost surely depress growth.

For now, the two sides seem far apart.

Larry Kudlow, Trump’s top economic adviser, who will accompany Mnuchin, said it would take time to persuade China to conform to fundamental trade rules so that U.S. companies can compete without being forced to surrender their technological know-how as a price of doing business in that country, as Beijing now requires.

“This program over time, hopefully, will be negotiated out,” Kudlow told CNBC on Thursday. “If it’s not, then the United States, President Trump will take action.”

By action, Kudlow meant the tariffs on roughly $150 billion in Chinese goods being threatened by the administration – a threat that has led China to announce its own tariffs on U.S. goods.

Beijing argues that U.S. companies have benefited from both access to its 1.4 billion people and the investments Chinese companies have made in the United States.