If the Trump regime follows through on their threat to raise tariffs on over $200 billion in Chinese goods from 10 to 25 percent tomorrow, Chinese officials say they're already prepared to retaliate.
We don't exactly how the Chinese will respond, but it appears we won't have to wait very long to see.
From the Associated Press:
Hours before the talks were set to resume in Washington, the Chinese government said it would retaliate if the U.S. tariff increases take effect. It did not provide details, but said it had made “all necessary preparations,” suggesting it might be bracing for worsening conflict.
“If the U.S. tariff measures are carried out, China will have to take necessary countermeasures,” said a Commerce Ministry statement. The spokesman, Gao Feng, said China has the “determination and ability to defend its own interests.”
We can only speculate, but our trade relationship with China can tell us a few things about where this is headed.
China has already or soon will impose retaliatory tariffs on all remaining imports from the United States and will likely use other measures to retaliate. They could increase the strength of their tariffs just as Trump is about to and they could slow down the process of importing American goods. It's also conceivable that China could start retaliating directly against American companies that operate inside China.
But if you consider those to be temporary consequences, consider that China could permanently replace imports from the United States with imports from other countries. And if Trump's trade war ever ends, there may not be any way to go back.
The Wall Street Journal reports that the office of Trump's trade representative Robert Lighthizer has formally filed the paperwork to increase tariffs tomorrow so, at least at the moment, it looks like this is going to happen. Trump could still change his mind in the next 11 hours, but no one should count on that.
The higher tariffs will take effect tonight at midnight.