Chinas Trade War Weapons

The trade war will go far beyond tariffs

In the past couple of weeks the United States and China have continuously increased the rhetoric and aggressive trade policies towards each other, to the point where now the United States government is preparing to enact 200 billion dollars in tariffs on Chinese imported goods. Experts say that this 200 million dollars is roughly equal to all the imports the United States makes from China. but for the Chinese government rising prices on products imported from the United States is not the only option that they have in this increasingly troublesome trade war.

The Chinese government could easily begin interfering in the business interests of american based corporations who operate within chinese territory. Doing things such as increasing regulatory oversight increase in taxes and even directing citizens to boycott American businesses. This may seem relatively simple but to a business they could cost vast amounts thanks to obstacles between them and sales as well as across their production lines. This trade war puts companies like Tesla and Walmart in the line of fire and makes their future in China uncertain.

Aside from the petty bureaucratic methods such as cancelled orders, the Chinese government could take it one step further and really deal a powerful blow to the United States economy. this could be done relatively easy by simply offloading a large percentage of it huge holdings of us treasuries. If you're not aware this is basically US debt that the Chinese government has bought and if they offload it it will put our economy in a quite dire situation. This action is seen as the nuclear option and may be currently under consideration by the Chinese government as the United States continues to ramp up the aggressive activities.

Although China would not come out of this trade war unscathed, they do have quite a few options that they can consider to retaliate with. The true question is whether or not the united states economy is strong enough to shrug off the effects Chinese retaliation to increased tariffs. As of right now both economies are taking hits and the market volatility has risen as uncertainty is the theme of the day and possibly the season. We can only hope the Washington and Beijing can reach an agreement before this trade war leads to another global recession.