Consistency has never been one of US President Donald Trump's great attributes.

And with such a wild card in the White House, it seems almost inconceivable that the future of the global economy, and along with it your livelihood, could well be determined within the next few weeks.

As foreshadowed, Mr Trump has delayed his self-imposed Friday deadline to significantly scale up his fight with Beijing, by raising tariffs on a range of Chinese imports from their current 10 per cent to 25 per cent.

With talks proceeding, and Donald Trump saying there has been "substantial progress" in discussions, the US President now will meet with his Chinese counterpart Xi Jinping at his Florida estate to personally hammer out a deal.

Previous "truces", including one last November, have done little to salve the growing list of casualties from the conflict; a dispute that threatens to extend from trade and economic philosophy to a more fundamental power play.

The truces agreed between Mr Trump and Mr Xi have still hurt their respective economies. ( Reuters: Kevin Lamarque )

The global economy — recovery no more

Since Christmas, the global economy has taken a decided turn for the worse, as the world's two largest economies have dug in on their positions.

There is no doubt Mr Trump has hurt China. Already saddled with extraordinary levels of debt, the Chinese economy is slowing markedly, which could well have social repercussions; something Beijing desperately wants to avoid.

But America too is feeling the pinch. Consumer sentiment is at rock bottom, manufacturing is going backwards, corporate earnings in the most recent quarter were unexpectedly lower and December's retail sales number was a shocker.

The collateral damage has extended to South Korea, where data last week showed exports, particularly for electronics and semi-conductors, had plummeted.

Meanwhile, in Europe, Germany barely has avoided slipping into recession and UK industrial production has slumped.

Rarely has the need for an urgent resolution been so acute. And yet, rarely has there been such little concern. Despite the looming deadline, global investors have blithely piled back into stocks.

Wall Street took another bold leap forward Friday night; it's now up more than 18 per cent since December's dark clouds stripped trillions of dollars from markets across the globe as panicked investors headed for safety.

Why? Because the set is in.

As much as Mr Trump rails against China for "rigging" markets, especially the currency market, he has successfully cajoled the US central bank to again position itself to rig stock and currency markets.

Since the financial crisis a decade ago, and even prior to that, the US Federal Reserve has manipulated the value of the US dollar, deliberately devaluing the greenback.

Wall Street traders seem to be the only ones benefitting from the trade showdown. ( Reuters: Brendan McDermid )

It's simple really. Create an extra $US3.5 trillion ($4.9 trillion) out of thin air, pump it into the US economy and — just like any commodity — watch the value decline.

Suddenly, your exports are much cheaper, your economy much more competitive.

A great deal of that cash found its way to Wall Street which helps explain the extraordinary gains for US stocks since the great recession.

But with the Fed now abandoning its rate rise program, the bet is that, should things again turn really ugly, the central bank will lurch into reverse and reopen the cash spigot, pushing stocks and bonds higher.

That's right. The worse things are, the greater the cheer from investors celebrating the end of the rate hike cycle and, perhaps even, new stimulus. A bet on bad news.

Trump's trade troika

Mr Trump is being torn by three factions within his administration over how to play the China trade negotiations.

While it has been criticised for throwing away decades of convention and trampling over the previous rules-based system — via the World Trade Organisation — the Trump administration correctly identified legitimate concerns about China's treatment of US corporations.

For years, the Chinese Government has pressured US companies to hand over technology to Chinese partners, handed out massive subsidies to state-owned firms and turned a blind eye intellectual property theft, all ignored by previous administrations.

But the boisterous and bellicose approach to the problem, along with a similar stance on defence, and particularly the response to China's power plays in the Pacific, have the potential to inflict grave harm.

A mercurial character, and one easily persuaded by the most recent argument, it's difficult to know which way he will bend.

There are those within his orbit, such as Treasury Secretary Steve Mnuchin who simply want the US to strike a deal with China to sell more product, like soybeans, and help alter the trade imbalance.

Another faction, led by US trade representative Robert Lighthizer, is pushing for a tough approach, including greater tariffs, to force a confrontation with Beijing that would address the main concerns over subsidies, technology transfers and intellectual property theft.

A third faction, led by presidential advisor Peter Navarro, want the US to break ties with China completely.

While Mr Lighthizer has held sway until now, that appears to be shifting.

Anxious to strike a deal — of any kind — and spooked by the stock market meltdown late last year, Mr Trump is looking for a win, according to a report in the Wall Street Journal over the weekend.

He does, after all, face an election next year.

What it all means for us

Australia relies heavily on Chinese tourists and students. ( ABC Midwest and Wheatbelt: Laura Meachim )

Ructions on financial markets aside, we will be deeply affected by the deteriorating diplomatic and trade affairs between our biggest ally and our major trading partner.

If recent events are a yardstick, it's unlikely any deal struck within the next month will be permanent.

Australia has an unhealthy dependence upon China.

Almost 38 per cent of our total exports land there. Last week, Australian coal reportedly was banned by Dalian port authorities in what would appear to be retaliation for statements in Parliament that alluded to cyber attacks emanating from China.

It's not just raw materials in the firing line. Almost 1.3 million Chinese tourists spent $11.5 billion here last year, now under threat by a cooling Chinese economy.

Similarly, our universities have bent over backwards to take advantage of the demand for higher education from China's growing middle class.

Current estimates from Austrade are that Chinese students account for around 30 per cent of all attendees at Australian higher education facilities. That's around 250,000 students.

If Mr Trump can't engineer a long-term agreement with Beijing, it could result either in a dramatic slowdown in China's economy or a diplomatic freeze from Beijing?

Either way, things could get ugly.