How the China trade war could get very bad, very fast

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.

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.