Trade War with China

tidalwave said:

Biggest issue is Trump and his team consider trade war with China a "Free Play" meaning it launches trade war and later they find out it doesn't work then they climb back down. Essentially, they take free shot at China. That's why Trump love tariffs, he can always deescalate if needed but he will swing few punches first to see how it goes.
How can China punish this type of behavior even if trade war dropped later on?

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xiabonan said:

The other thing about a trade war is that there's a limit to how much damage one side can deal to the other side. You can't indefinitely add tariffs because at one point there will just be no exports.

So, if it drags long enough, a new equilibrium will emerge after the pain has been suffered and absorbed.

The meaning of this is, tariffs work best when they're not implemented. If you can't get your opponent, in this case China, to yield before the tariffs are implemented or shortly after implementation, the longer it drags the more those affected industries will be able adjust themselves to the new environment.

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China on Friday announced its decision to impose additional tariffs of four different rates on 5,207 items of imported U.S. products worth 60 billion U.S. dollars.

The rates of additional tariffs on such products will be 25 percent, 20 percent, 10 percent, and 5 percent, according to the Customs Tariff Commission of the State Council.

"China was forced to take the countermeasures" in response to a U.S. plan to raise tariffs to be imposed on 200 billion dollars of Chinese goods from 10 percent to 25 percent, the commission said in a statement.

"If the United States act willfully and puts its additional tariff measures into effect, China will instantly implement such tariff measures," the commission said.

"The United States violated consensuses reached by multiple bilateral negotiations and once again unilaterally escalated trade frictions," the commission said, noting that the move severely violated World Trade Organization rules, hurt the global industrial chain and free trade mechanism, substantially damaged the interests of China and the Chinese people, and will also have negative impacts on the economic development of the world including the United States.

China has taken the countermeasures to safeguard its own legitimate rights and interests and to curb the escalation of trade frictions. Meanwhile, the measures are expected to lower the impact on the domestic production and people's lives as much as possible, it said.

After implementing the countermeasures, authorities will evaluate the effects together with all sectors of society and strive to minimize the influence on production and lives, the statement said.

"China promises that it will continue to unswervingly push forward reform and opening-up based on established arrangements and pace, firmly support economic globalization, firmly safeguard free trade rules and multilateral trade mechanisms to realize joint development and share prosperity with all countries that pursue progress," the commission said.

Full lists of U.S. products subject to different levels of additional tariffs are available on the website of the Ministry of Finance.

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Orthan said:

Larry kudlow, director of the National Economic Council, had tough words for china. He warns china not to underestimate the US stance on trade, says that china´s 60 billion dolar retaliation against the US is weak, and talked about china´s currency.

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IMO this means that the trade war still has no end in the horizon.

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