Christine McDaniel
The U.S.-China trade war has been going on for six years. After several rounds of tariffs and other countries getting roped in, the limits of retaliation are showing. And while trade wars are always costly, rarely do countries have equal leverage. As this confrontation drags on, China’s options appear especially and increasingly limited.
In the beginning, emotions usually fly high, and countries target products for which a tariff would do little harm to itself but a lot of harm to the opposing side. For instance, six months after the U.S. tariffs, China chose U.S. soybeans to include in its retaliation, which made sense because U.S. soybean exporters were heavily reliant on China’s market (57 percent of exports in 2017) and China had other options (Brazil).
But the longer the tariffs stay in place, the more time countries have to adjust to the new trade landscape, find workarounds and form alliances. Time also reveals the weakest links in each country’s trade-war armor. Two major determining factors in understanding these weak links are trade orientation and the ability to coordinate with others. China is getting squeezed on both fronts.
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