'Takes two to tango': China & US expect each other to back down in trade dispute

'Takes two to tango': China & US expect each other to back down in trade dispute
Beijing remains hopeful that a full-scale trade war with Washington can be avoided, but has placed the ball in the US court, hoping for fair negotiations, China's US ambassador noted, following talks with a top US diplomat.

"Negotiation would still be our preference, but it takes two to tango. We will see what the US will do," Cui Tiankai said on Wednesday, after an hour-long closed-door consultation with Acting US Secretary of State John Sullivan.

The meeting between the two officials had been scheduled before Washington announced on Tuesday that nearly 1,300 Chinese export goods could be slapped with 25 percent tariffs. In response to the move, potentially targeting some $50 billion of its exports, Beijing promised on Wednesday to hit 106 American products, including soybeans, automobiles and chemicals, with a similar 25 percent tariff hike. China also threatened retaliation against US protectionist practices at the World Trade Organization (WTO).

While the enforcement date of the retaliatory measures has not been announced, the Chinese ministry said their implementation and scale would depend on the tariffs due to be finalized by the US over the next few months.

Describing Wednesday's meeting as "comprehensive and complex," Cui noted that the sides managed to discuss bilateral relations as well as "trade aspects." Sullivan for his part underlined "the need to restore fairness and balance to our economic ties," State Department Spokesperson Heather Nauert related.

In an attempt to calm down the US stock markets, which have plummeted since trade tensions escalated between China and the United States, Donald Trump took to Twitter on Wednesday morning, defending his trade deficit policies and denying the existence of any trade war with Beijing.

"We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the US," Trump tweeted. "Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!"

‘We are not in a trade war with China, lost it many years ago’ – Trump

Trump's statements seem to have further confused his recently appointed top economic adviser. "I'm not sure what exactly he's referring to," White House National Economic Council Director Larry Kudlow told Fox Business. "The president is the president. He wants to tweet, he's going to tweet," he noted on Wednesday.

"I personally, my view, I believe that the Chinese will back down and will play ball," Kudlow added.

While defending Trump's resolve to lower the US trade deficit, Kudlow denied that the US has engaged in a trade war with China. "There's no trade war here. What you've got is the early stages of a process that will include tariffs, comments on the tariffs, and then decisions and negotiations," he said.

Earlier, speaking to reporters on the White House lawn, Kudlow hinted that US tariffs against Chinese products may not even go into effect. "You know, there are carrots and sticks in life, but [Trump] is ultimately a free trader," he noted. "[Trump] said that to me, he's said it publicly. So he wants to solve this with the least amount of pain," Kudlow added.

Following the meeting between Cui and Sullivan on Wednesday, a State Department official told Reuters that the US may pursue negotiations with China, declining to say whether high-level meetings between two nations were planned.

Meanwhile, China has reiterated its warning that a full-blown trade war will have a negative impact on the US economy, labor force and consumers. "Such protectionism would not protect anybody. It will not protect American workers or American farmers. It will not protect American business or American consumers. Actually, it will hurt everybody, including the US economy itself," Ciu said during the CNBC Interview on Wednesday.

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