The trade battle between China and the United States could be protracted and bitter, with both countries now pointing blame at each other. Trade talks collapsed in recent weeks, with President Trump telling the public that China had reneged on agreements. In a recent interview with Fox News, the Chinese Ambassador claimed that it is the U.S. that backed out of agreements.

Trade tensions caused volatility in the stock market last year, and they threaten to be a major headwind in 2019.

Two Sides of Blame in China Trade News

Earlier this month, President Trump increased tariffs on up to $200 billion of Chinese goods coming into the U.S.

Tariffs were raised from a previous level of 10%, up to 25%. The surprise move came after months of negotiations which were reportedly going well for both sides.

Trump posted on Twitter earlier this month, saying simply that “The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”

The President followed up with a later post saying that “Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products. These massive payments go directly to the Treasury of the U.S.”

The later tweet was then deleted, with no reason offered by Trump or the White House.

This week, the bitter back and forth has escalated further, with Chinese Ambassador Cui Tiankai telling Fox News that “If we review the process of trade talks between us over the last year or so, it is quite clear it is the U.S. side that, more than once, changed its mind overnight, and broke the tentative deal already reached”

The Ambassador did still offer hope that a deal would go ahead. He told Fox that “China remains ready to continue our talks with our American colleagues to reach a conclusion. Our door is still open.” The Ambassador did note that China was in “no rush”, indicating that the nation would be willing to endure a long trade war.

President Trump Wants a Deal in His First Term

The President would receive a huge political boost by signing a new trade deal with China. Trade imbalances were a major talking point during Trump’s campaign, and they have remained so throughout his presidency.

Trump has said as recently as this week that his focus is now on trade, ahead of infrastructure and other issues that are still tied up in the legislative process. Without a deal or at least some positive news in place, investment markets are at risk of suffering the same kind of volatility that decimated stocks at the end of last year.