A Chinese woman adjusts a Chinese flag near U.S. flags before the start talks between the two nations in 2014. | Ng Han Guan/AFP/Getty Images POLITICO MONEY PODCAST How the China trade war could get very bad, very fast

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Consumers have not yet felt a major hit from President Donald Trump’s trade battle with China. But that could change in a major way later this year if the world’s two largest economies cannot make a deal.


In the latest POLITICO Money podcast, POLITICO senior trade reporter Doug Palmer explains the potential for Trump to hit more than $500 billion in Chinese imports with tariffs as high as 25 percent over the coming months.

Trump is scheduled to sit down with Chinese premier Xi Jinping at the Group of 20 Summit at the end of the month in Buenos Aires, Argentina. Free-traders inside the administration are hoping the bilateral talks forestall another round of tariffs and set up future negotiations.

But there’s a raging battle inside the White House with hard-line trade advisers including Peter Navarro trying to tamp down hopes for the talks and free-trade voices including National Economic Council Director Larry Kudlow sounding hopeful. The standoff between Navarro and Kudlow burst into public view on Tuesday with the NEC director, in a CNBC interview, ripping a recent speech by Navarro on China as a “disservice” to the president.

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The fear among the free-traders is that another big round of tariffs will drive up consumer prices, further impede American exporters — especially farmers — and constrict economic growth. Higher prices caused by tariffs could also push the Federal Reserve into more aggressive interest-rate hikes to fight inflation.

Also on the podcast, Palmer discusses the potential for Trump to slap tariffs on automobiles imported from Europe as well as the prospects that the next Congress, which will feature a Democratic House majority, will approve Trump’s U.S.-Mexico-Canada Agreement.

