US, China inch toward all-out trade war

Who's going to blink first?  Or will there be any blinking at all?

After the Trump administration announced a 25% tariff on $50 billion in Chinese goods last Friday, the Chinese responded immediately by imposing tariffs on $50 billion in U.S. goods.

Now the president has upped the ante considerably and brought the two sides closer to an all-out trade war that is rattling markets and worrying companies involved in the bilateral trade relationship.

CNNMoney:

The White House said Monday evening that if China goes through with its promise to retaliate against the US tariffs announced last week, the United States will impose tariffs on an additional $200 billion worth of Chinese goods.

"Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States," Trump said in a statement.

The Trump administration said Friday that it will impose a 25% tariff on $50 billion of Chinese exports. China, claiming the United States had "launched a trade war," retaliated almost immediately, outlining its own tariffs on US goods worth $50 billion.

The escalating conflict between the world's two largest economies has rattled markets and companies, which fear disruption to their global supply chains.

The Chinese Commerce Ministry reacted quickly to Trump's announcement, accusing the United States of "extreme pressure and extortionist behavior" and warning it would "strike back hard."

Analysts warned that the risks are growing of an increasingly damaging clash that will ripple around the globe.

"The tit for tat brings the two sides closer to a full-blown trade war," Louis Kuijs, head of Asian economics at research firm Oxford Economics, wrote in a note to clients.  "While there is in principle still room for negotiation, attitudes seem to be hardening."

If Trump has an ace up his sleeve in this high-stakes game of poker, now is the time to play it.

No nation wants to be seen as negotiating under a gun.  Trump obviously believes that China will fold rather than risk an all-out trade war.

But when national pride is at stake, all bets are off.  For Trump to maintain credibility, he must convince the Chinese that he's willing to follow through on his threat.  Can he do it while giving them an "out" to save face in this showdown?  A small, symbolic concession by the U.S. that would allow both nations to step back from the abyss?

Trump must be able to see the danger to U.S. companies doing business with China of ruinous tariffs on Chinese products.  There may be a large trade imbalance with the Chinese, but there are hundreds of U.S. companies who sell Chinese products in the U.S. whose business is threatened by a trade war.  It means lost jobs as well as lost profits.  Is the president prepared to accept those consequences?

We are told this is just a negotiating tactic by Trump and everything will work out in the end.  As it stands now, we're not hearing any give from the Chinese on the issue.

Who's going to blink first?  Or will there be any blinking at all?

After the Trump administration announced a 25% tariff on $50 billion in Chinese goods last Friday, the Chinese responded immediately by imposing tariffs on $50 billion in U.S. goods.

Now the president has upped the ante considerably and brought the two sides closer to an all-out trade war that is rattling markets and worrying companies involved in the bilateral trade relationship.

CNNMoney:

The White House said Monday evening that if China goes through with its promise to retaliate against the US tariffs announced last week, the United States will impose tariffs on an additional $200 billion worth of Chinese goods.

"Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States," Trump said in a statement.

The Trump administration said Friday that it will impose a 25% tariff on $50 billion of Chinese exports. China, claiming the United States had "launched a trade war," retaliated almost immediately, outlining its own tariffs on US goods worth $50 billion.

The escalating conflict between the world's two largest economies has rattled markets and companies, which fear disruption to their global supply chains.

The Chinese Commerce Ministry reacted quickly to Trump's announcement, accusing the United States of "extreme pressure and extortionist behavior" and warning it would "strike back hard."

Analysts warned that the risks are growing of an increasingly damaging clash that will ripple around the globe.

"The tit for tat brings the two sides closer to a full-blown trade war," Louis Kuijs, head of Asian economics at research firm Oxford Economics, wrote in a note to clients.  "While there is in principle still room for negotiation, attitudes seem to be hardening."

If Trump has an ace up his sleeve in this high-stakes game of poker, now is the time to play it.

No nation wants to be seen as negotiating under a gun.  Trump obviously believes that China will fold rather than risk an all-out trade war.

But when national pride is at stake, all bets are off.  For Trump to maintain credibility, he must convince the Chinese that he's willing to follow through on his threat.  Can he do it while giving them an "out" to save face in this showdown?  A small, symbolic concession by the U.S. that would allow both nations to step back from the abyss?

Trump must be able to see the danger to U.S. companies doing business with China of ruinous tariffs on Chinese products.  There may be a large trade imbalance with the Chinese, but there are hundreds of U.S. companies who sell Chinese products in the U.S. whose business is threatened by a trade war.  It means lost jobs as well as lost profits.  Is the president prepared to accept those consequences?

We are told this is just a negotiating tactic by Trump and everything will work out in the end.  As it stands now, we're not hearing any give from the Chinese on the issue.