Trump has also threatened to impose import taxes on the remaining $300 billion in Chinese imports, a step that Kudlow estimated would take several months to implement.
Wallace then confronted the economic official with Trump's own words, as the president has specifically said China is paying the tariffs.
Kudlow added, "Both sides will pay", but he stipulated that China "will suffer (economic) losses" from reduced exports to the US, not from paying the tariffs.
"While we hope for the best, our baseline case is now for the United States and China to fail to reach a deal, meaning tariffs will get raised on the remainder of Chinese exports to the United States".
In the past, Beijing has retaliated with its own tariff hike by raising duties on $110billion (£83.5million) of U.S. imports. Farmers have seen the most notable impact, as China slapped additional taxes on agricultural products imported from the U.S. Last year, the Trump administration set aside billions to bail out farmers impacted by the trade dispute, but for many, the bailout was not enough to recuperate the losses they've experienced.
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"The president and his administration have failed to realize we're stronger when we work with our allies on every issue - China included", she said on CNN's "State of the Union". The president also ordered tariffs to be raised on all remaining USA imports from China, valued at around $300 billion.
Vice Premier Liu He, China's top economic adviser, sought to defend the changes in talks with senior us officials in Washington on Thursday and Friday, arguing that China could accomplish the policy changes through decrees issued by its State Council, or cabinet, sources familiar with the talks said.
Trump began the standoff past year because of complaints about unfair Chinese trade practices.
President Trump warned Beijing to "act now" on a trade deal by tweeting that negotiations will be "far worse for them" in his second term.
Mr Kudlow also said that Mr Trump and China's President, Xi Jingping, may meet in late June at the G20 global conference in Japan.
The Straits Times' Washington and Beijing bureaus look at how the trade tensions between the world's two largest economies have played out so far.