Summary

President Trump has upped the ante in the US-China trade war.

This week the US president announced new tariffs on $200 billion worth of Chinese goods, scheduled to come into effect in September. They will be added to the $34 billion worth of duties that came into effect on July 6. This first wave of tariffs was met with an equal response from the Chinese side, which slapped counter-tariffs on US goods like soybeans and bourbon. However, it will be impossible to reciprocate in-kind on the new September tariffs given that China only imports around $150 billion worth of US goods. This will force the Chinese authorities to get creative in their attempts to ramp up the political and economic costs of President Trump’s trade war.

Will the combined weight of Beijing’s response be enough to force President Trump to blink? The answer is increasingly looking like a resounding ‘no.’