Trump-voting cities face tariffs' brunt

Nick Marchio and Joseph Parilla, the report's two authors, concluded that while China and the US are not yet in a full-fledged trade war, the rumblings between the world's two largest economies is yet another signal of a new era in US trade policy, one that local and state leaders ought to be watching closely.

The report comes before US Treasury Secretary Steven Mnuchin will lead a US delegation to Beijing for trade talks on Thursday and Friday, a trip many hope can de-escalate tensions in the nations' trade and investment relationship.

Daniel Ikenson, director of the Herbert A. Stiefel Center for Trade Policy Studies at Cato Institute, said a stable and growing commercial relationship between the two countries is essential to the well-being of the global economy.

A smarter, more durable approach to the problems would be for Washington and Beijing to make lists of all of their gripes, put them on the table and see to what extent they can be resolved or mitigated in a bilateral trade or investment agreement, Ikenson wrote on Tuesday on the China-US Focus website.

He said that the US and China have not yet dealt seriously with the prospect of a bilateral free trade agreement, and given the current climate, such talks may be difficult to commence.

"However, what better way is there to avert a deleterious trade war than to resolve issues by putting them in writing and signing the document for all the world to see?" he said.

Economists and business leaders such as Fred Bergsten of Peterson Institute for International Economics, former AIG Chairman Maurice Greenberg and Ikenson's colleague Simon Lester all have proposed a bilateral free-trade agreement between the two countries.