After $100 billion in taxes imposed on both sides this summer, Washington is preparing new measures on $200 billion in imports from China.
However, the Trump administration has invited again Chinese officials to restart trade talks, the White House's top economic adviser said on Wednesday.
Chinese Foreign Ministry spokesman Geng Shuang told reporters today that China welcomed the invitation, and the two countries were discussing the details.
"China has always held that an escalation of the trade conflict is not in anyone's interests. In fact, from last month's preliminary talks in Washington, the two sides' trade talk teams have maintained various forms of contact, and held discussions on the concerns of each side," he said.
A strategic antagonism
But progress towards an agreement remain to be seen. Behind the trade opposition, there is a deeper, strategic antagonism: that of two powers with a hegemonic ambition. It is very possible that the two sides won't agree in the end.
In fact, Barclays has just amended its scenario on the consequences of the Sino-American trade war and is more pessimistic than average. Its basic assumption is that the United States will overtax all Chinese products by 20% and that Beijing will respond in identical terms.
"The US has security concerns about Chinas industrial policy, while China sees policies such as the Belt and Road Initiative and Made in China 2025 as necessary to avoid the middle income trap. These conflicting goals could mean the relationship between the US and China becomes more confrontational over time," the bank said in a report.
However, Barclays said the permanent impact would only be 0.2 to 0.4% of GDP over time, and rather 0.2% for the United States. This is also one of the reasons why Barclays thinks that the U.S and China will keep their hard line.
(Source : Barclays study "China US tensions, when giants collide")
However it is also planning for a worst case scenario : " In an alternative US isolationism scenario, where the US increases tariffs on all imports by 20pp and all trading partners respond in kind, we estimate permanent economic losses in the US at about 1.5% of GDP. Since the US is at the center of the protectionist regime shift, it may incur a greater decline in trade volume than its trading partners. We estimate losses in China of about 1.0% of GDP."
And in the end the bank believe that the consumer will end up paying the price. "Losses to consumers, who end up paying higher prices for many goods, are likely to be several times larger than net economic costs to the economy as a whole. In our baseline US-China scenario, we estimate plausible losses to US consumers at about 0.6% of GDP, only some of which is transferred to the government and corporate sector in the form of tariff revenues and profitability."