In a world where the US buys way more from China than China does from the US, there are natural limits to what China can do to retaliate. There will be pain, for sure. But there will also be opportunity. Other suppliers will jump into the breach and something way more important is going to happen in the meantime. The US has the cheapest clean energy source through shale gas and this resource can underpin massive new industries. In a world where robotics make ever more hands and legs redundant, payroll becomes much less of a factor when you calculate your OPEX. And China starts to learn the wasting the environment for immediate cash puts them in a bind as well so making things in China become more and more expensive and the US loos ever more enticing as a manufacturing location. I predict the US becoming a new manufacturing powerhouse with endless cheap energy and a smart combination of robotics and AI as well as great quality of life. The US has much better cards in the long game. It must only pull through the short term pain.
Unless there’s a breakthrough in the trade talks before midnight tonight, U.S. tariffs on $200 billion in Chinese imports are about to rise from 10% to 25% — an escalation of the trade war that could hurt major importers and trigger even more painful retaliation by China.