There is "no chance", President Donald Trump comes back in the US trade war with China, former Trump adviser Steve Bannon told CNBC Wednesday.
"China has been running an economic war against the industrial democracies for 20 years," said the fierce ex-White House chief strategist, who helped create Trump's nationalist message.
Bannon said former presidents – Bill Clinton, George W. Bush and Barack Obama – passed the money on tackling and resolving the problems of China's protectionist economy. But Trump doesn't shy away from the fight, he added.
Under Trump, Washington has taken a tougher approach to China over previous presidential administrations. In addition to trade disputes and the alleged Chinese theft of US intellectual property, US intelligence officials expressed their distrust of Chinese tech giants and Apple rival Huawei and the Chinese telecom company ZTE.
Standoff with China "cut the core of what the United States will be in the future," Bannon said in an interview with "Squawk Box". "We all have the cards."
U.S. officials have repeatedly said that the Chinese stock market and the economy have suffered more than those in the United States, and will continue to wear the brown. On Wednesday, China reported surprisingly weaker growth in retail and industrial output for April, which increased pressure on Beijing to eradicate more stimulus as the US trade war escalates. China's Communist Party has remained credible and puts out a rally in the state media.
With a trade-off at a stalemate, the US is contemplating putting in taxes on the remaining billions and billions of dollars of Chinese goods coming to the US last week, the Trump administration followed the threat and increased $ 200 billion in customs duties from 1
Trump's tweets and hard public rhetoric aside, negotiators from both sides must come behind closed doors and work hard to get a deal, Bannon said. "This won't happen overnight."
Since May 5, when Trump surprised investors with tweets that threatened higher tariffs on China, S & P 500 had lost about $ 1.1 billion in value – the kind of downturn that, if it persisted, could make a real draw US economic growth. The index did some of it back with Tuesday's nearly 1% recovery after Monday's 2.4% decline. Despite the knock from trade considerations, S & P 500 was still only 4% away from May 1, the highest day today and up more than 20% since 2018 was on Christmas Eve.
China's dispute makes it really strange bedfellows, with Trump facing talks from Wall Street and free trade conservatives to reach an agreement, and Democrats like Senate minority leader Chuck Schumer urging the president to extract most possible concessions from China.
However, Trump will not bow to the pressure and make a superficial agreement that does not deal with all the ways in which Beijing fails economically, Bannon says, adding that he believes the China issue will target the 2020 presidential campaign in favor of the president.
– CNBC digital correspondent in Singapore Yen Nee Lee and Reuters contributed to this report.
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