MNI INTERVIEW: Trade War Near After Tariff Delay: Ex-Official

--US, China Unlikely to Agree on Main Battle Over Technology

By Greg Quinn

     OTTAWA (MNI) - The United States and China remain headed for a trade war

that could a trigger a global recession even after Donald Trump's delay of some

tariffs, because the move ignores the main fight around technology, a former

Canadian trade official told MNI.

     The tensions are already causing damage by forcing companies to upend

global supply chains and there's little clear evidence Washington is chasing a

breakthrough agreement that will significantly boost the global economy, said

Dan Ciuriak, a former deputy chief economist in Canada's trade department.

President Xi Jinping won't be able to match the success of Canada and Mexico in

turning Trump's threats around rigged trade into a new pact because the United

States sees China as a geopolitical threat, he said.

     Stock and bond markets have swung wildly this week as President Trump and

his officials said the U.S. would delay setting tariffs on some Chinese goods

through the Christmas shopping season, while renewing accusations about currency

manipulation. Inverted bond yield curves and weak data in major trade nations

like Germany have added to investor fears about a global recession, which

Ciuriak said remains a possibility.

     "The world is in for something of a bruising," he said. "It would be very

difficult for anyone to pull back" in the U.S.-China dispute he said.

     U.S. restrictions on the transfer and development of technology remain in

place and both nations are willing to pay the economic price to stay ahead in

areas such as artificial intelligence and machine learning, he said. Ciuriak

likened the situation to how the U.S. sought to isolate and weaken the USSR's

economy during the Cold War.

     "The U.S. is hardening the line on technology, that's the main theater" of

the dispute, said Ciuriak, who is now a trade consultant in Ottawa. "This thing

isn't going away." 

     China has objected to U.S. rules that would heavily restrict dealings with

Huawei Technologies as the world prepares to build a faster 5G network. The U.S.

says Chinese companies are illegally taking technology from other nations. That

wasn't addressed in the decision to delay some tariffs into December from

September, Ciuriak said.

     "There is no fundamental change, I think this is tactical maneuvering by

the Trump administration to deal with political pressures" over consumer prices,

he said. "The U.S. is hardening the line on technology, that's the main

theater."

     U.S. threats on trade are weakening the global economy by making companies

delay investment spending, uncertainty that by itself can trigger a recession,

he said. "This becomes a self-fulfilling prophecy at some point, and you do get

your downturn," Ciuriak said. "That can only lead to a global recession."

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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