Historically speaking, each armed conflict is preceded by a currency war first and then a trade war. US has lost currency war against China, and now it's upping the ante by stepping into the next phase — trade war.
Imposing new tarrifs on steel and aluminium, POTUS recently said that “trade wars are good and easy to win”. So, he probably hopes for an easy revenge over the lost currency war — In a move that could portend massive shifts in the global oil game, the Shanghai International Energy Exchange will unveil on March 26th an oil-futures contract denominated in Chinese yuan rather than U.S. dollars. The national Interest has tried to explain how this is not The End of the Petrodollar yet, but their subtitle says: “This long-term economic trend should greatly trouble Washington”.
Starting to react at this development of events, Trump has prohibited on March 13th Broadcom's (Singapore based) proposed buyout of Qualcomm on national security grounds. Yesterday we have announcement that the US will impose $60 billion in tariffs on China as early as this week. It's a beginning of a full fledged trade war…
Beijing has warned that cascading trade protectionism risks hurting the global economy, and ultimately the US as well. “A trade war is never the right solution,” Mr Wang said on Thursday, addressing a press conference during the annual session of the National People’s Congress, China’s rubber-stamp legislature.
“The outcome will only be harmful to everyone,” he added.
— FT, March 8th, 2018.
In the meantime, we found out from Gordon Chang, author of ‘The Coming Collapse of China’, that China is a leader in Quantum computing and AI technologies, and that they also have much better developed Space Program then US.
So, how would the trade war phase look like? Here is a CNBC's Phil Han explanation of the relations, and who would be hurt the most:
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