Editor's note: Richard Fairchild is an associate professor at the Finance of School of Management at the University of Bath. The article reflects the author's opinions, and not necessarily those of CGTN.

The China-U.S. trade war continues to hit the headlines, amidst astounding, confusing, and indeed strange and inconsistent tactics by the U.S. President Donald Trump. We are currently in the midst of an ever-escalating, and possibly out-of-control, retaliatory tariff war, with both sides enacting tit-for-tat tariff increases on each other's imports. Trump has just announced massive new tariff hikes on 300 billion dollars of Chinese imports starting in October, in retaliation to China's announcement that they plan to impose duties on 75 billion dollars of the U.S. imports from China. How did we get here? Could this situation have been avoided?

In my opinion, this damaging, escalating trade conflict could have been prevented. The U.S. President is noted for his "flip-flopping" tactics, constantly changing his mind, which creates confusion between the parties in any negotiation process. In July, the trade talks between China and the U.S. in Shanghai had ended promisingly and positively, with both sides agreeing to look at reducing and removing tariffs on each other's goods, and making trade easier between the two countries. However, within days of returning to the U.S., Trump shocked the world by doing precisely the reverse: he announced a massive hike in U.S. tariffs on imports from China. In Trump's words, he was going to tax almost everything from China. This has set into motion the forces that have led to the current hostile and bitter trade conflict between the U.S. and China. There was an opportunity at the end of the July talks to prevent this, and the U.S. President blew it!

From August 24 to 26, President Trump attended the G7 Summit where he has been pressured by all sides to de-escalate the trade war with China. The world leaders, of course, recognize the enormous damage that the escalating U.S.-China trade war is causing to the global economy. The New York Times notes that "at the end of a chaotic G7 Meeting, Trump changes his tone on China. Again." The NY Times even reports a change in Trump's description of his feelings towards China, shifting from an aggressive stance at the beginning of the meeting to one of great respect by the end.

Once again, Trump is providing inconsistent and mixed messages in his behavior and strategy. In my opinion, these mixed messages are creating confusion in the global stock markets. Furthermore, they are creating uncertainty for Corporate America. One Business leader there has talked about the lack of capital investment by U.S. companies. He says that the U.S. Federal Bank will be unable to help boost U.S. business with proposed interest rate cuts, as it is product-market uncertainty caused by the trade war that is damaging corporate investment. Many farmers in America are up in arms about the damage being caused to their livelihoods as a result of the trade war: they want the President to stop it.

It is my belief that Trump's "flip-flopping" behavior creates global economic confusion and uncertainty. At a deeper level, it also creates psychological confusion and uncertainty! As a result of his constant shifting, Chinese officials have said that they feel that the trust and feelings of goodwill and cooperation between China and the U.S. have been psychologically damaged and eroded. China feels that any deal signed with the U.S. can easily be broken by a U.S. President who constantly shifts his position.

This is a president renowned for saying what people want to hear when in a meeting room with them, and then back-sliding and reneging when back at the White House. This was witnessed in his U-turn following the Shanghai talks. This behavior has also been observed in the case of the Huawei ban. Following pressure from the leaders of the U.S. technology companies, the President had announced, in a meeting with them, that he would consider lifting the ban, only to renege on that afterward! 

China does not feel that it can trust him enough to sign a deal before the next U.S. presidential election in 2020. Indeed, according to CNBC's report, China has come to terms with the fact that it is fighting a "forever war" with the U.S. and is already preparing for this. China is diversifying its trade with other countries to reduce its reliance on America and strengthening its domestic markets. According to Yi Xiong, China Economist at Deutsche Bank, "We think China is neither aiming to quickly reach a trade deal nor trying to hit back at the U.S. as hard as it can... China will still respond to U.S. tariffs, but with smaller and targeted measures."

In the meantime, the escalating trade war continues to hurt all parties involved. Can the world afford to wait until 2020 for China and the U.S. to bury their differences and make a positive agreement? Businesses in both the U.S. and China are being hurt in this tit-for-tat war. The global economy is being damaged too! It would certainly be extremely beneficial if cooperation and trust could be restored between the U.S. and China sooner rather than later.

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