It’s been brewing for a while, but now it’s here, will there be a clear winner or loser?
The long-predicted trade war with China is here. China just responded to President Donald Trump’s tariffs on steel and aluminum by slapping tariffs on U.S. food and steel pipes, setting off a sharp drop in U.S. stocks. With the White House promising additional trade barriers on up to $60 billion in Chinese imports, more tit-for-tat trade retaliation seems likely.
But many economists and trade experts believe that, while the U.S. president could win the current battle, he will ultimately lose a trade war and a big reason for that should concern the U.S. tech sector.
China’s export-focused economy has much more to lose right now from a protracted fight than does the U.S.
“China has far more exposure to the U.S. regarding exports,” says Christopher Thornberg at Beacon Economics in Los Angeles. Its state-owned enterprises depend on exports to the U.S. to keep paying off their significant loans. Exports overall account for about 20 percent of China’s GDP, with a quarter of that going to the U.S. By contrast, only 11 percent of U.S. GDP is export-based, of which 10 percent goes to China….