Xi is resisting giving in on a list of trade compromises, even in the face of tariffs that threaten to add 25 per cent to the cost of goods shipped from China to the U.S.
Trump insisted the tariffs the U.S. has placed on Chinese goods don't hurt American consumers, saying there is "no reason for the U.S. Consumer to pay the Tariffs". "But news flow today suggests this could take more time and is unlikely to be concluded until late June", said John Woods, Hong Kong-based chief investment officer of APAC at Credit Suisse AG.
China's envoy to the trade talks, Vice Premier Liu He said before leaving Washington that Beijing would not compromise on matters of principle and that tariffs on Chinese exports to the US should be lifted as a condition for striking a deal.
The latest breakdown has prompted an escalation in the tariff war between the world's two largest economies that looks increasingly like the International Monetary Fund and others' worst-case scenario for a global economy already forecast to grow this year at its slowest rate since the immediate aftermath of the 2008 financial crisis. The move affected 5,700 categories of Chinese products including internet modems, routers and similar devices.
"We have said many times that increasing tariffs will not solve any problem", spokesman Geng Shuang said, hours before Beijing said it would itself raise tariffs.
US Trade Representative Robert Lighthizer is thought to be ready to implement tariffs on the remainder of China's exports.
As Beijing promised retaliatory measures, Chinese state media blamed the USA for a lack of progress in trade talks while emphasizing the country's economic resilience.
Kudlow told Wallace that Trump and China's President Xi Jinping could meet next month on the sidelines of the Group of 20 summit in Japan to discuss their differences on trade, but no new talks are scheduled.
Washington wants Beijing to roll back plans for government-led creation of Chinese global competitors in robotics and other technology that its trading partners say violate its free-trade commitments.
While praising Trump, Bannon slammed Treasury Secretary Steven Mnuchin, who's been personally involved in the negotiations with China.
Trump has since defended the United States tariff hike and said he was in "absolutely no rush" to finalise a deal. That's because both sides will feel less pressure to do a deal if their economies and markets hold up.
In a commentary, state TV said the effect on the Chinese economy from the U.S. tariffs was "totally controllable".
Trade talks wrapped up later Friday in Washington without an agreement.
After polite words by both sides on Friday about "constructive" discussions, the rhetoric grew more heated over the weekend. The president's tweet also goes beyond past claims that tariffs are simply a negotiating tactic to force better terms with China.
"China trade negotiations and concern that it's really deteriorating pretty significantly, and that's impacting all areas of markets", said Kristina Hooper, chief global market strategist at Invesco in NY.
"But China has taken so advantage of the United States for so many years, that they are way ahead (Our Presidents did not do the job)".