Commerce Secretary Wilbur Ross downplayed expectations for an end to the U.S.-China trade war when both sides meet in Washington next week, saying the world’s two largest economies are a long way from resolving their differences.
“We’re miles and miles from getting a resolution,” he said in an interview on CNBC on Thursday. “Trade is very complicated. There are lots and lots of issues.”
The Dow Jones Industrial Average and S&P 500 Index traded lower after the secretary’s remarks, before erasing losses.
Chinese Vice Premier Liu He is scheduled to visit Washington from Jan. 30-31 to meet U.S. Trade Representative Robert Lighthizer.
“People shouldn’t think that the events of next week are going to be the solution to all of the issues between the United States and China. It’s too complicated a topic,” Ross said. “I believe that China would like to make a deal. I believe that we would like to make a deal. But it has to be a deal that works for both parties.”
Ross added that he sees a “fair chance we do get to a deal” eventually.
White House economic advisor Larry Kudlow said the conversations with Liu’s team next week will be a crucial test of whether the two sides can come to an agreement.
“The Liu He talks will be determinative,” Kudlow told Fox News on Thursday, adding that Trump has told him that he remains “rather optimistic.”
“The scope of the talks are huge and the talks are going to continue at the highest level,” said Kudlow. Right now “we have nothing on paper, there is no contract, there is no deal.”
The comments from the senior Trump administration officials come with just over five weeks to go before a deadline to conclude a deal. If that doesn’t happen, the Trump administration has threatened to raise the tariff rate on $200 billion in Chinese goods to 25% from 10%.
While the two sides appear to be in close contact as the deadline approaches, it’s also apparent that there’s some way to go before they resolve their differences. Investors have been jittery this week about the prospects of a deal, as news trickled out that substantial differences remain, including a Bloomberg News report that the governments are struggling to bridge the gap on intellectual-property issues.
The IMF this week downgraded its global outlook for the second time in three months, warning of mounting risks including an escalation of the trade war and tightening credit.