Could the US and China really be on the verge of the kind of geopolitical stalemate that dominated the second half of the 20th century?
President Donald Trump is making good on his pledge to escalate the trade war with China by imposing tariffs on US$200 billion of Chinese goods. The Chinese government, for its part, is already retaliating with new taxes on $60 billion of American imports.
If you’re curious why China’s sanctions don’t match Trump’s, there’s an easy explanation. As a number of commentators have correctly pointed out, Beijing is running out of American products to target. Americans bought $375 billion more stuff from China than the Chinese bought from the US last year, which means Trump has a lot more to punish.| International News
That’s because China has many other ways to retaliate, such as dumping its considerable holdings of US debt or making it harder for Trump to get a nuclear deal with North Korea. In these and other areas, Beijing has enormous leverage. This has led some to suggest that the trade war may soon turn into a “new cold war.”
Could the US and China really be on the verge of the kind of geopolitical stalemate that dominated the second half of the 20th century? Much will depend on how China responds to the latest tariffs. I believe that this response could take four forms.
Cooler (BS) heads
First, China could choose to de-escalate the confrontation. This could be done quickly by negotiating some resolution with the Trump administration – though the president’s terms for ending the trade war remain unclear.
Alternatively, China could let the conflict simmer by keeping the fight in the trade arena, allowing it to continue to retaliate while appearing “reasonable.” This approach would avoid any major embarrassment for China while kicking the dispute down the road in the hope that the November elections, or the 2020 presidential elections, will soften American policy. In fact, China has already said that it won’t negotiate until after the midterms.
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