ASSESSMENTS

Trump Looks to Open Another Front in the Trade War With China

Aug 27, 2019 | 09:15 GMT

Chinese investors watch a stock ticker at a Beijing securities company on Aug. 26.

Investors rest on a chair in front of screens showing stock market movements at a securities company in Beijing on Aug. 26, 2019. Chinese investors and U.S. businesses are both watching the White House for signs of a new tactic in the trade war between the rivals.

(WANG ZHAO/AFP/Getty Images)

Highlights

With the White House strategy of escalating tariffs against China nearing the point of diminishing returns, it will explore other means to respond to Chinese intransigence in trade negotiations.
His threats notwithstanding, the damage to the U.S. economy and companies will likely restrain President Donald Trump from invoking emergency powers to stop businesses from operating in China.
Beijing's negotiating position is likely to continue hardening as the White House ups the ante, particularly if it tries to ban U.S. business activity or sanction Chinese entities.

For much of August, the United States and China have followed a tit-for-tat pattern of tariffs as they wage their trade war, with Beijing answering the round of U.S. tariffs announced Aug. 1 by President Donald Trump with some of its own. But a bombshell announcement by Trump on Aug. 23 has the potential to change the rules of the game. With the tweet "American companies are hereby ordered to immediately start looking for an alternative to China," Trump offered a glimpse of where he might take the trade fight next. Although Trump followed his stark warning only with an announcement of higher tariffs on Chinese goods, he later reiterated that the White House had the power under the International Emergency Economic Powers Act of 1977 to force U.S. companies to divest from China, keeping the option of an economic withdrawal on the table....

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