By Phillip Orchard
The first round of U.S. tariffs and Chinese counter-tariffs came into effect on Friday. All told, they will directly affect some $68 billion in goods. On July 15, the U.S. is expected to impose more tariffs targeting $16 billion in Chinese goods, with proportional Chinese retaliatory measures to follow. Things are likely to escalate from there. Whether or not this spat should be defined as a full-blown trade war, both sides are now firing with live ammunition, and neither side will escape unscathed.
In some ways, it’s not an equal fight. China is more dependent on U.S. exports than the U.S. is dependent on Chinese imports, and the Chinese economy is far more fragile than that of the U.S., so it’s reasonable to conclude that the United States is heading to battle from a position of strength. Still, it’s not just about who can punch the hardest on the economic front, but also about who can take the most hits without facing major political blowback at home.