RALEIGH – For weeks, a deal seemed to be in place to resolve simmering trade differences between China and the U.S.  Nope. New tariffs ordered by President Trump hit early Friday and investors are worried. What went wrong?

NCSU photo

Dr. Mike Walden

NCSU economist Dr. Mike Walden says the Chinese may have erred in their estimate of what Trump would do if a deal fell apart.

“Readers may be wondering how this happened,” he tells WRAL TechWire.  “It appeared the US-Chinese trade talks were moving toward completion, with a signing ceremony possibly at the end of May.”

Then something went wrong. A big something.

“Apparently the text of  the deal previously agreed to had some major changes made by China at the last minute,” Walden says. “Some observers think China misread President Trump’s criticism of the Federal Reserve as a sign of his worries over economic trends.

” Yet the recent economic numbers have been stronger than anticipated in the US but much weaker in China.  So the Trump Administration thinks it has the upper hand with China, since China’s economy needs a deal more than our economy does.”

Economist: NC will take a hit, growth will slow as China-US trade war intensifies

So what happens now?

“If China moves back at least partway to the previous text of the agreement, then a deal might be back on track,” he says.

If not …