The cancellation of a summit between the United States and North Korea casts doubt on prospects for trade negotiations between the U.S. and China – and could result in the Trump administration taking a harder line on China, a White House official told CNBC.
The official said President Donald Trump was holding off on his natural instincts when it came to China. Instead of relying on China hawk Peter Navarro, one of his top trade advisors, the president let more moderate Treasury Secretary Steven Mnuchin take the lead on trade negotiations.
The talks haven't yielded any results so far, and Trump said he was dissatisfied with last week's high-level trade negotiations with Chinese officials including Vice Premier Liu He. Mnuchin has said the possible trade war between the nations was on hold, while Larry Kudlow, the president's top economic advisor, said that tariffs were still on the table.
During his 2016 campaign, Trump often targeted the U.S. trade relationship with China, claiming that previous administrations had allowed the world's most-populous nation to rip off American workers. Yet since he took office, Trump has developed what he calls a friendship with Chinese President Xi Jinping, even as their nations remain trade adversaries.
Another White House official, however, signaled that there was a shift in the president's attitude toward Xi. Trump blames the Chinese president for Kim Jong Un taking a harder line in negotiations with the U.S. ahead of the now-canceled summit, the source said.
Doubts about the meeting grew during the past few weeks as North Korea ramped up its criticism of Trump administration officials, such as national security advisor John Bolton and Vice President Mike Pence, who had advocated a tough approach to the communist nation. North Korea also stopped responding to U.S. officials in the past week, administration officials have said.
China is North Korea's biggest ally and trade partner, although Trump has praised Xi for helping bring Kim to the table for talks. Yet earlier this week, before he canceled the meeting, Trump suggested that Kim soured on the idea of a potential summit after the North Korean leader had a second secret meeting with Xi.
"There was a somewhat different attitude after that meeting," Trump said Tuesday. "I can't say that I'm happy about it."