Jul 6, 2018 - Economy

No end in sight for the trade war

A road sign saying, "Next exit: Who knows?"

Illustration: Sarah Grillo/Axios

If you were looking for signs of a thaw in the trade war between the U.S. and China, you're going to have to wait. Right now, it's all escalation.

Here's how bad it's getting.

  • "The conflict is likely to escalate beyond trade. The Trump administration last month curbed visas for Chinese students, and Congress looks set to toughen vetting of foreign investment in the country, which will restrain Chinese capital." (Reuters)
  • Trump "threatened to impose tariffs on every single Chinese import into America as the world’s two largest economies exchanged the first blows in a trade war that isn’t set to end anytime soon." (Bloomberg)

Our thought bubble, from Axios Future editor Steve LeVine: Typically, negotiators in high-stakes disputes build in mental off-ramps for the desired accord to avert breaking points, and to get to a beneficial outcome. Right now, there are no obvious signs that the U.S. side has any — only more brinkmanship.

Why it matters: There are signs of a potential thaw with the EU, with the German carmakers pushing for a no-tariffs outcome. But when it comes to the Chinese, the Trump administration has left itself without a lot of options, other than hoping that Xi Jinping will climb down from his "Made in China 2025" plan to dominate the 10 biggest technologies of the future.

Given that the Chinese may be as stubborn as Trump, we may be embroiled in what no one seems to have planned for, which is a long, debilitating trade war.

Go deeper:

China hits U.S. with $34 billion in retaliatory tariffs

The ripple effect of the U.S.-China trade war

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