What Is The Endgame of US-China Trade War

China says it will respond to the new tariffs that President Trump has asked his administration to prepare. But how?

It cannot directly match the total of $234bn worth of goods that the US has in its sights, because it does not import enough American goods (another fact which the US president complains about). Last year, US goods exports to China were worth $130bn.

What Beijing could do instead is to make life more difficult for American business interests, with more aggressive action by regulators, such as safety inspections or financial investigations. China could also try to force its currency lower to gain competitiveness.

There has even been speculation that China could sell some of the $1 trillion worth of US government debt (or bonds) that it holds. If it sold enough, that could drive up the cost of borrowing in the US, but it would also inflict losses on China, by forcing down the value of those bonds.

Author: GrainOfTruth

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