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Trump Backs Away from Trade War With China as Nafta Looks Unlikely

As the continuing NAFTA negotiations grow more and more unlikely, Donald Trump and his team have walked away from a potential trade war with China.

As the pressure builds for Donald Trump and his presidential team to agree to a financial win in the North American Free Trade Agreement (NAFTA), it appears that the administration has backed away from any potential trade war with China.

US Treasury Secretary Steven Mnuchin said yesterday that the two economies were never engaged in a trade war but that it was simple a “trade dispute”. This comes despite regular announcements from Trump and other White House officials saying that the US was prepared to engage in a trade war with China and that it would, in fact, be a “good and easy win”.

The announcement from Mnuchin comes only a few days after Chinese officials travelled to Washington D.C. in order to discuss the ongoing trade discussions.  The clock continues to tick for Trump and his men to come to a decision on NAFTA and those following the events closely are now finding it increasingly difficult to separate the Chinese discussions from those of NAFTA.

The VP of strategic analysis at Stratfor, Roger Baker, said that patterns were emerging within the US administration such that they have been willing to “push negotiations from a maximalist position” before “settling…for less than they laid out in the beginning.”

Much of the building pressure is coming from those industries that rely heavily on the trade between NAFTA countries and China, such as agriculture, as they continue to deal with the uncertainty of market access and tariffs.

This has perhaps led to the rushed joint statement from Chinese and US officials announcing that the two countries “had reached a consensus on taking effective measures to substantially reduce the United States trade deficit in goods with China.”

However, it is clear the US administration still have a lot of work ahead of them with issues surrounding intellectual property protections and ‘country-of-origin’ standards among the big NAFTA issues still up in the air.

The disagreements on these issues have contributed strongly to the anti-China, or anti-US, sentiment that has fostered on both sides of the argument.