One of the biggest risks of Trump's trade war, and any other trade war for that matter, is that it could spiral out of control. This is an especially significant risk when trade policy is directed by a belligerent, petulant manchild like Donald Trump.
China has announced that it will impose a reciprocal amount of tariffs on American products in retaliation for Trump's tariffs on Chinese products.
Trump is now directing his regime to retaliate for China's retaliation by imposing tariffs on and taxing virtually everything we import from China.
In a statement, Trump said he had ordered his chief negotiator, U.S. Trade Representative Robert E. Lighthizer, to draw up a list of $200 billion in Chinese products that will be hit with tariffs of 10 percent if China refuses his demands to narrow the yawning U.S. trade deficit and change its industrial policies.
The president warned that he was prepared to hit China with an additional $200 billion in import taxes unless Beijing capitulates.
Such a step would be virtually unprecedented in U.S. history and would put nearly all of the $505 billion in products that the United States imports from China under tariffs.
Even if you're feeling generous enough to assume that this is simply an initial negotiating tactic intended to shock China into doing things they can't do (more that in a moment), it would not take $400 billion in tariffs and taxes to crater our economy. Even half of that would obviously lead to further retaliation from China and it wouldn't stop this from spiraling further out of control.
Now, Trump is still insisting that China do something they simply can't do. They can't eliminate our trade deficit because it's driven by American consumers, not the Chinese government. Americans consumers demand things and China makes them. We want cheap consumer products and China delivers. In many cases, we no longer even have the industrial capacity or available labor to manufacture things we import from China.
Furthermore, there are only so many things China can purchase from America to reduce our trade deficit because the truth is we don't exactly make a lot of things. China was already purchasing as much as the American agriculture industry can possibly produce, but that is obviously no longer the case because of Trump's trade war.
There's no way Trump could impose tariffs of this magnitude without shredding dozens of consumer product industries and cratering our consumer-driven economy. And that's even before China retaliates.