The U.S. -China trade war came about because of President Trump's controversial stand on the U.S. trade deficit between the two countries.
Despite the December truce, "most firms expect trade war to escalate", the report said.
Studies of trade-war impacts by the International Monetary Fund and the European Central Bank found the "likely impact on the USA economy to be significantly more negative than on China", analysts Janet Henry and James Pomeroy said in a research note. Yet those very pressures, analysts say, give the two countries a stronger incentive to make peace. "Now, the question is can we negotiate these changes and can we do so with enforcement (and) with timetables".
Trump initiated the trade war because of complaints over unfair Chinese trade practices - concerns shared by the European Union, Japan and others.
Negotiations between the two nations are expected to resume next week.
In December, Beijing's commerce ministry said China and the United States "made new progress" on the issues of trade balance and intellectual property, one of the main sticking points of the trade dispute, during a phone call between officials from the two countries.
USTR said the U.S. delegation would also include under secretaries from the U.S. Departments of Agriculture, Commerce, Energy and Treasury, as well as senior officials from those agencies and the White House.
The world is watching anxiously. That makes their dispute "a matter not only for the two countries but for the world", he added.
Businesses, amid uncertainty, have held back on the sort of investment that could boost long-term growth, while governments globally struggle with a combination of high debt levels and mounting infrastructure needs. "But right now, China is feeling the blow, really, of our tariffs, and I think that that's an appropriate place for us to have taken the relationship given the amount of stuff that they were stealing from us". But the dispute goes far deeper than lopsided exports and imports. American officials worry those might erode USA industrial leadership, and complain that China's technological prowess is underpinned by the theft of intellectual property from US firms.
The U.S. -China trade war threatens a decade-old hope among business and economic leaders that rising purchasing power among Chinese consumers would support an era of synchronized global growth.More news: United States envoy meets American accused by Russian Federation of spying
Trump has slapped import tariffs on hundreds of billions of dollars of Chinese goods as he seeks concessions from Beijing on issues ranging from industrial subsidies to hacking, sparking retaliation by China.
But aside from products facing earlier tariffs - including washing machines, solar panels and metals - Chinese exports to the U.S. have held up better than expected.
Uncertainty over whether the two sides can build on the ceasefire agreed by Trump and Xi in Argentina has fueled volatile trading in global markets.
The U.S. and Chinese governments both have expressed interest in a trade settlement but give no indication their stances have shifted.
"If we have a successful negotiation with China, then Apple sales and everybody else's sales will recover". Cutting a deal with Beijing could help at least reduce the threat.
Other drivers of USA growth, including government and business spending and net exports, are all sagging or expected to do so in coming months.
Factory activity weakened across much of Europe and Asia in December as the U.S. Auto sales tumbled 16 percent in November over a year earlier and weak real estate sales are forcing developers to cut prices.
U.S. access to China to do business has been one of the key sticking points of the two countries' trade relationship, and President Trump has explicitly criticised the Made in China plan previously. There are fears of both sides hiking tariffs if no deal is reached.