US-China trade war could be a 'generational struggle': former US Department of Commerce official

Kenneth Underwood
Senior Producer

U.S. stocks recovered Tuesday following the worst trading day this year.

The seesaw market action highlights what could be the beginning of a wild ride for investors as Washington and Beijing remain locked in a never-ending trade battle.

“I think what we, the market should expect is continuing volatility for the foreseeable future,” Stefan Selig, former under secretary of commerce for international trade at the U.S. Department of Commerce, told Yahoo Finance’s On the Move. “This is going to be a continuing pattern, where you're going to have increased tensions between the two sides, no easy resolution to what is a highly complex issue. I think the president and the administration losing patience, then they weigh in with some other initiative, whether it's labeling China a currency manipulator or adding Huawei and other companies to the entity list or raising tariffs or increasing the breadth of tariffs.”

U.S. President Donald Trump and China's President Xi Jinping poses for a photo ahead of their bilateral meeting during the G20 leaders summit in Osaka, Japan, June 29, 2019. REUTERS/Kevin Lamarque

On Tuesday, Goldman Sachs said it does not expect a trade truce to come before the 2020 election, leading many to wonder what the White House hopes to achieve.

“The question is, what are we waiting for?,” said Selig. “If we're waiting for some grand bargain that addresses all of the commercial and economic issues we have with China, that is not going to happen anytime soon… Are we going to fundamentally get them to reform their economy with that large state-owned enterprise sector? I think that is not going to happen anytime soon. And this could be, frankly, a generational struggle.”

For the time being, there Is no end in sight. The next round of trade talks are scheduled to take place next month when Chinese representatives are expected to visit the U.S.

“The ability for the United States and the Western economies to accommodate a large, non-market economy like China, we've never done this before, so we have no experience,” Selig said. “And as a result of that, we really don't have any sort of blueprint to really go forward with.”

Kenneth Underwood is a senior producer for Yahoo Finance. Follow him on Twitter@TheKennyU.

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