China vs US trade war. Who will win?
Despite advisors and several countries said otherwise trying to stop Donald Trump, the trade war has started. After rising up the tariffs on aluminum and steel as an economic protective measure, Donald Trump attacked again. This time the US president announced tariffs on China imports as a punishment of the supposed theft of US technologies. So far there is no news about the tariffs that will be imposed to Beijing. US Trade Representative Robert Lighthizer said on Wednesday that most of them are directed to China’s high-technology sector, besides restrictions for Chinese investments in the US. China vs US trade war. Who will win? At least Trump says it will easy for US to defeat China.
Robert Lighthizer said to press that the president made the decision after reviewing several files about Chinese enterprises that have stolen US technologies and intellectual property. According to him, Trump considered a Chinese aggression to American economy and trade. An investigation has identified, under Section 301 of the 1974 Trade Act, coercion, and theft from China intellectual property and technology knowledge. Bad news is that China, if replies, could knock out America’s economy. Indeed, the Asian country said that they will hit US agricultural exports if tariffs on imports worth up $60 billion.
The United States knows that China will hit back on agricultural exports, particularly soybeans, but according to Washington they are prepared for the strike. Actually, the White House said if that happens,they have “counter-measures” prepared; however, they are pretty conscious that not body wins in a trade war. Although Trump said America is ready for war trade and they will defeat rivals very easily, the facts speak by themselves. China is a huge country with a lot of natural resources.
Also, it has very powerful allies and is a global manufacturer where several American trade businesses have their productions there. On the other hand, while Trump fights with everybody including US allies, China tries to gather supporters and helps the poorest countries. That’s not good for US because they will lose market and in spite of the pressure and restrains US could tip leverage in China’s favor. In addition, China continues tightening links with nations like Russia, India and with a lot of Latin American countries.
If the trade war happens with the real dimension that Trump believes, US farmers will be the most affected ones. It´s not a secret for China that agriculture is the weakest point of America’s economy, and they will attack some specific targets like soybean, which represents a $14 billion-a-year product for US business. Paradoxically, America’s farmers backed Trump during his campaign and now they will victims of his ineptitude.
Hua Chunying, Foreign Ministry of China, has said they have not the intention to start a trade war with anybody, but if they are forced to do so, then they will neither be scared nor hide. As Hua warned, China will respond to protect their legitimate interests. EU has already responded to aluminum tariffs threatening Harley-Davidson motorcycles and also Levi´s Company. In fact, Donald Trump’s administration stepped back on some of the measures concerning steel and aluminum, one of them conceding exemptions to Canada and Mexico, and dialogued with European Union officials and others to discuss potential exemptions.
The trade war will bring serious consequences to the global economy since the confrontation will have as rivals two of the highest economies in the world, and China has the biggest dollar reserves worldwide, so it may possible that currencies like dollar itself felt down and stock markets will watch the fall of important companies.
Furthermore, Trump “Iron Fist” and “American first” policies are at disadvantage. He abandoned the 14-country PacificTrade Pact and threatened to get out of the North American Free Trade Agreement with Canada and Mexico.
Then we better pray if we don´t want to witness a full disaster in the American economy and if we want to sleep well and with some food in the stomach.