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Everything You Need To Know About The Possible Coming Trade War


  • Fears of a trade war between China and the US continue to rise as President Trump announces potential plans to impose an additional $100 billion in tariffs on Chinese imports.
  • This is just after China responded to an earlier round of $50 billion in tariffs with $50 billion of its own retaliatory tariffs.
  • However, the world is a far more complicated place than most people realize. In this case, there are several reasons why Trump is both right and wrong on trade.
  • That includes China's theft of intellectual property and its deeply troubling China 2025 initiative which is likely itself a violation of international trade law.
  • That being said, there are far better and less risky alternatives to the administration's current tactics, including the WTO where the US has almost never lost a case against China.

(Source: imgflip)

I've written extensively about why trade wars are terrible for the economies of all parties involved. I've also explained in detail why the market is freaking out over the prospects of a major one between the two largest economies on earth.

Well, the current trade spat has continued to escalate in a tit for tat exchange:

  • US imposed tariffs on Chinese solar panels and washing machines.
  • US imposed 25% and 10% tariffs on steel and aluminum, respectively before temporarily exempting almost everyone, except for Russia, China, and Japan.
  • US imposed $50 billion of tariffs on Chinese imports, covering 1,300 products.
  • China retaliated with $3 billion in tariffs against 128 US products, (due to steel tariffs).
  • China retaliated with $50 billion in tariffs against 106 US products, especially US agricultural imports that come from states Trump won.

Now the President has kicked things up a notch by announcing:

"Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers. In light of China's unfair retaliation, I have instructed the US Trade Representative to consider whether $100 billion of additional tariffs would be appropriate ... and, if so, to identify the products upon which to impose such tariffs." -President Trump

The reaction from China was swift:

We will immediately fight back with a major response...We have no other choice...We feel America is very arrogant. They have taken a wrong action. The result is that they will hurt themselves. If they release the list of $100 billion tariffs, China is prepared. And will not hesitate." -China Ministry of Commerce

Previously, the market had recovered from its earlier trade related drops to calming reports that the US and China had begun negotiations over intellectual property protection and greater access to China's market for US companies. In addition, National Economic Council Director

This article was written by

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