Trade spat with China will end in a ‘pot of gold’, White House economic adviser predicts

President Donald Trump’s top economic adviser has said that the brewing trade war between the United States and China would end in a “pot of gold”.

Larry Kudlow, who officially became Mr Trump’s top economic adviser less than a week ago, made the comments after a back and forth between the United States and China in which both countries threatened billions of dollars worth of new tariffs — sparking fears of a trade war between the world’s two economic superpowers.

“Don’t overreact, we’ll see how this works out,” Mr Kudlow said on Fox Business. “My view is, look, I’m a growth guy, I’m a Reagan supply-side growth guy. I think at the end of this whole process, the end of the rainbow, there’s a pot of gold.”

Mr Trump’s tariff announcement came Tuesday, when the United States unveiled a list of 1,300 Chinese goods worth $50 billion that would be subject to coming tariffs. China responded just a day later with a list of their own goods they would tax if coming from the United States, adding up to $50 billion as well.

Mr Kudlow framed the brewing trade war that has left lobbyists and Washington scrambling as a piece of ongoing negotiations between the two countries, and said that it is possible that the tariffs will not be implemented at all.

“You know, there are carrots and sticks in life, but he is ultimately a free trader,” Mr Kudlow told reporters on the White House lawn before his television appearance. “He's said that to me, he's said it publicly. So he wants to solve this with the least amount of pain.”

That point was echoed by deputy press secretary Hogan Gidley, who praised the president when asked about the threats between the countries.

"None of the proposed tariffs are in place yet. The president is the best negotiator on the planet," Mr Gidley said.

It is not just the Trump White House that is saying it knows what it is doing, or that they would win this trade fight if it gets down and dirty.

Soon after the Chinese government announced their planned tariffs — which would hit several American markets like soybean production — the country’s state media said that China would win any trade war with the United States.

“Within 24 hours of the US publishing its list, China drew its sword, and with the same strength and to the same scale, counteracted quickly, fiercely, and with determination,” the ruling Communist Party’s People’s Daily newspaper said in commentary Thursday.

“The confidence to know that [China] will win the trade war comes from the scale of [China’s] consumer market,” the paper, which said that China’s market potential is not comparable to any other economy, continued.

The potential for a trade war has left global markets off-balance, even as world stocks pushed higher Thursday as a result of investors anticipating an easing of trade tensions. After dropping as threats from the two countries came out, Wall Street shares rebounded Wednesday as White House officials said that trade talks were ongoing.