- There may be "no exit" in looming trade war fears, says former government official Matthew Gold.
- A 25 percent tariff on $34 billion in Chinese goods is set to take effect at midnight ET.
- "I don't think [Trump] is going to back down," Gold says.
Matthew Gold, former deputy assistant U.S. trade representative for North America under President Barack Obama, told CNBC that there may be no way to escape a trade war with China.
"We’re in a downward spiral," said Gold, who is currently an adjunct professor of law focusing on international trade at Fordham University.
In March, Trump first proposed steel and aluminum tariffs to correct what he deemed were unfair trading practices. The tariffs went into against Canada, Mexico and the European Union on June 1. Since then Mexico, Canada and the EU have also issued retaliatory tariffs of their own, targeting items such as agriculture products, steel, motorcycle and spirits.
At midnight Washington time on Friday, 25 percent tariffs on $34 billion in Chinese goods are set to take effect. China said it would immediately retaliate with tariffs of its own targeting agricultural products if the U.S. went ahead with its plans.
"I don't think [Trump] is going to back down," Gold said. "I think he's going to dig this dangerous hole deeper."
Meanwhile, the stock market has been on edge as the U.S. prepares to implement the tariffs.
Gregory Daco, chief U.S. economist at Oxford Economics, a global economics firm, said that Trump has gone "a step too far" trying to renegotiate long-standing trade policies and said escalating tensions with China could lead to supply chain disruptions, stock market effects, business uncertainty and reduced private sector confidence.
"U.S. activity is probably peaking in the second quarter and we’re in an environment of slowing economic momentum, in which these tariffs are going to have an outright larger impact on the economy," Daco said Thursday on "Power Lunch."
Typically representatives from each country would get together during trade disputes and negotiate "creative solutions," Gold said.
But that may not be possible with the current tariffs because they do not follow World Trade Organization's rules.
"When we take WTO illegal actions, that’s something other countries won’t negotiate with," Gold said. "They’ll put their foot down and just retaliate."
The WTO could not be reached for immediate comment.
"The idea that when laissez faire policies that the United States tends to have confront state capitalist policies that China has, we know that the United States loses," Beth Baltzan, founder of American Phoenix Trade Advisory Services and formerly of the Office of the United States Trade Representative, said Thursday on "Closing Bell."