China has signaled it would impose tariffs on $3billion United States (US) imports should both sides fail to resolve a trade dispute first-fired by Donald Trump's imposition of new tariffs on Chinese steel and aluminum products, and further compounded yesterday, with Washington's announced intent to impose another $60 billion in tariffs on Chinese goods.
World financial markets have reacted and are reacting negatively to a likely trade war involving the world's two largest economies: the US Dow and S&P indices dropped three-percent each yesterday, the Australia, Hong Kong and Taiwan markets falling two-percent, with Japan's falling five-percent and Shanghai's three-percent also today. In a mean time, all major markets across Europe are also trending down today.
The cost of a trade war is already being reflected in market reactions. There could be no winners in a trade war. There will be many victims including regular citizens
in both countries who will inevitable have to pay more for goods and services. Moreover, the impacts of a trade war could also send global economic health into an illness dooming nation development into a decline.
Yet, per Trump's orders to levy heavy tariffs on China and to limit China's investment in the US technology sector based upon concerns that China has violated US intellectual property rights via restrictive licensing arrangements in China and cyber theft in the US, unless China yields and strikes a new agreement with the US that would appease the Trump administration, a trade war appears imminent.
While the Trump administration apparently hopes China will eventually give in to its demands to close the trade gap between the two countries, China's reciprocal announcement of tariffs on US products indicate that Beijing might be willing to put a more formidable fight amid a background of its new economic wealth which is 17-times stronger than it was back in the 1990s when it caved in facing a possible trade war back in that time.
"China does not want to fight a trade war," its commerce ministry announced earlier today, "but it is absolutely not afraid of a trade war," it concluded.