After the US-Sino Comprehensive Economic Dialogue, trade issues are alienating not only China and America’s NATO allies – but its NAFTA partners, Canada and Mexico.

As the Trump administration’s first US-Sino Comprehensive Economic Dialogue (CED) ended in Washington, it could only agree on three no’s: canceled news conferences, no joint statement and no new announcements on market access by the US to China, or by China to the US.

A simple scenario is that the CED has paved way to a major trade conflict between the US and China. Yet, despite tough political rhetoric, economic realities do not seem to support such a view, at least yet.

A more nuanced scenario is that, while the Trump administration was willing to penalize the Sino-US economic dialogue over slow progress in deficit reduction and perhaps North Korea’s geopolitics, it also wanted to use the CED as a ‘demonstration effect’ in the impending NAFTA talks and trade reviews – to signal determination.

From trade pragmatism to friction

In fact, the shadows over the CED talks emerged a while ago. After the Trump-Xi Summit in early April, the US and China announced a 100-day Action Plan to improve strained trade ties between two nations. Yet, only two weeks later, Trump issued a Presidential Memorandum, which directed Ross to investigate the effects of steel imports on national security; on the basis of the Trade Expansion Act of 1962.

As Trump returned from his visit to France, he ramped up the heat. “They’re dumping steel and destroying our steel industry,” he said at the eve of the CED. “They’ve been doing it for decades, and I’m stopping it. There are two ways: quotas and tariffs. Maybe I’ll do both.”

While China’s US Ambassador Cui Tiankai warned the US on “troubling developments” that could derail the bilateral relationship, US Commerce Secretary Wilbur Ross added heat by stating that he would present Trump a range of options to restrict steel imports on national security grounds.