The United States and China, the world’s two largest economies, are “already in the early stages,” says Niall Ferguson, a senior fellow at the Hoover Institution at Stanford University.
Ferguson also said for CNBC that President Donald Trump was no longer in a position to stop lasting damage to relations with Beijing by de-escalating their full-blown trade war because it is “not just about trade.”
He notes that the dispute has not turned into a multi-sided conflict about technological and geopolitical issues.
“The good news is I don’t think they are destined for a hot war over the South China Sea or anywhere else, but I do think they are in a Cold War,” Ferguson said. “And I don’t think President Trump any longer has the power to turn it off by doing a trade deal — which I think he intends to do at some point between now and next year’s election.”
The U.S. and China have been embroiled in a full-blown trade war for over a year, with the two sides imposing tariffs on each other’s imports, most recently on September 1.
Earlier this week, Washington and Beijing agreed to hold an in-person meeting sometime next month and resume trade talks, raising hopes that they could soon make substantial progress in de-escalating the trade dispute.
“The problem for Trump is that, having started this Cold War with a trade war, he’s no longer in a position to simply turn it off when it suits him because the thing has escalated into other domains,” Ferguson said, adding that the President has considerably less control over technological issues.
Meanwhile, former American Commerce Secretary Carlos Gutierrez said in optimism that the two sides could make significant progress during the next round of trade talks was unrealistic.
“I think it’s a bit optimistic. The two sides are too far apart, this has been such a public dispute,” said Gutierrez, who served under George W. Bush. “That environment is not conducive for a deal. I think it’s good that they’re meeting, but I wouldn’t bank on a deal in the short term.”
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