For XML file types, including XLIFF file types, you can cause SDL Trados Studio to normalize whitespace.
If you do so, SDL Trados Studio normalizes whitespace in accordance with the following:
It only normalizes whitespace that contains a new line character.
When SDL Trados Studio does normalize whitespace, it:
Replaces whitespace within text with a single space.
Replaces whitespace between text and any tag with a single space.
Replaces whitespace between inline tags, or between an inline tag and a structure tag, with a single space.
Does not change the whitespace between structure tags. (The user does not see this whitespace.)