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Trade between US and China will 'come to a head' at G20 summit, Kudlow says

From left, Chinese President Xi Jinping, Papua New Guinea's Prime Minister Peter O'Neill, Japanese Prime Minister Shinzo Abe, and U.S. Vice President Mike Pence pose for a group photo at APEC Haus in Port Moresby, Papua New Guinea, Sunday, Nov. 18, 2018. Photo: AP 

Top White House economic adviser Larry Kudlow said Tuesday morning that he anticipates a direct confrontation between the US and China over trade at the upcoming G20 meeting in Argentina after the collapse of plans to hold talks in Washington next week.

"It will come to a head at the G20, I think that's the key point," Kudlow told reporters at the White House.

His comments came after a high-level Chinese delegation delayed and then canceled their trip to the US capital amid an escalating war of words between President Donald Trump and his Chinese counterpart Xi Jinping.

China's Foreign Ministry spokesperson Geng Shuang announced Tuesday in a statement that Vice Premier Lui He will travel to Germany on Sunday at the invitation of Olaf Scholz, the vice-chancellor and finance minister.

A US Treasury spokesman declined to comment on the status of negotiations.

Trump last Friday described a list of 142 concessions offered by the Chinese as "not acceptable," though he also expressed optimism that he could reach a deal with China before January 1, when a new round of tariffs kicks in raising duties to 25% on a wide array of consumer goods.

The tariffs have drawn complaints from American businesses, who are responsible for paying the import duties. It's also spurred concerns about renewed inflation, just as the Federal Reserve is set to raise interest rates in December.

Vice President Mike Pence subsequently increased pressure on Beijing in his remarks over the weekend to the Asia-Pacific Economic Cooperation summit in Papua New Guinea.

The No. 2 US administration official warned that Trump wasn't in a rush to end the trade war he started earlier this year and was willing to "more than double" the tariffs it has already placed on $250 billion in Chinese goods. The United States "will not change course until China changes its ways," Pence said in his speech.

Xi once again denounced Washington's "winner-takes-all" trade strategy, calling on differences between the two countries to be ironed out "through consultation."

"History has shown that confrontation, whether in the form of a cold war, or a hot war, or a trade war, will produce no winners," Xi said in his own speech at the APEC summit in Papua New Guinea's capital, Port Moresby.

The APEC summit ended on Sunday without agreement on a joint statement over a paragraph on trade, breaking a 25-year tradition since leaders began attending the yearly meeting.

Kudlow said Tuesday that Pence and Xi "spoke several times" during the APEC meeting but did not elaborate.

The punt to the Argentina summit comes after a week of cautious optimism that US and Chinese negotiators could reach some kind of a deal beforehand.

Optimism flared earlier this month after Commerce Secretary Wilbur Ross floated the possibility that negotiators would meet in Washington ahead of the Argentina meeting. The proposed gathering came shortly after Treasury Secretary Steven Mnuchin and China's Liu He spoke by phone in hopes of moving toward a deal.

Kudlow on Tuesday declined to make any sunny predictions on the fate of the talks, saying: "I don't want to conclude anything."

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