How The "Currency Cold War" Between The US And China Could Heat Up

The true nuclear option would be direct protectionism, where the US slaps onerous tariffs and taxes on Chinese imports. While China would undoubtedly respond in kind, the US consistently runs a large trade deficit with China, meaning that it has far less to lose in the event of an escalating trade war. Viewed in this light, the US arguably holds the balance of economic power and could therefore extract some concessions from Xi Jinping and company in the coming months.

That said, a fundamental feature of cold wars is that they're inherently unstable. Even the smallest miscalculation or misinterpretation can rapidly devolve into the mutually assured destruction. Only time will tell if the two superpowers can successfully de-escalate the conflict or whether it will deteriorate into a catastrophic trade war.

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Bill Myers 4 years ago Member's comment

Enjoyed this article, thanks. Looking forward to more by you.

Matt Weller 4 years ago Author's comment

Thanks Bill!

Bill Johnson 4 years ago Member's comment

Very well done. You've summed up a complex issue rather well. I believe #Trump wouldn't think twice about direct protectionism. He seems to have no qualms about instituting punitive tariffs on #China.

Alexis Renault 4 years ago Member's comment

Can #Trump unilaterally enact a #tariff on his own?