The U.S.-China trade war isn’t going away. Last week, U.S. Treasury Secretary Steven Mnuchin reportedly invited China to Washington to give talks another go, ostensibly to avoid another escalation. Sure, political calculations may lead to symbolic concessions or a temporary truce. Yet both sides have basically given up on trying to strike a comprehensive deal anytime soon and appear to be digging in for the long haul, Mnuchin’s outreach notwithstanding. The U.S. thinks it’s in prime position to strike on trade issues and strategic matters alike. To China, the U.S. is demanding nothing less than an abandonment of the state-led economic model underpinning its rise – and the Communist Party’s hold on power. It believes the costs are not yet high enough for a dramatic overhaul. Put differently, the trade war is will only get bloodier from here. How it plays out, though, will depend on which of the two different types of trade wars the U.S. decides to fight.
State of Play