Washington: ‘The United States has not entered a trade war with China because the United States has already lost this war years ago. Our country has lost this war because of the foolish and inefficient people. As of today, the United States loses $500 billion in the trade war with China. Therefore, the United States has nothing to lose in this war. China is robbing the United States of $300 billion through the intellectual property theft. This will not be tolerated from now,’ warned US President Trump.
While the United States President was giving this reaction to the trade war, China has indicated that the US bonds worth $ 1.17 trillion will be the ‘Nuclear Option’ in the trade war. President Trump last month announced imposition of tariffs on Steel and Aluminium imported from China. This was followed with an ordinance for imposing new taxes worth $ 50 to 60 billion against China. In retaliation, China announced imposition of tax on 128 US products. The White House had reacted very strongly to this and had retorted that instead of targeting the US exports, China should improve their unfair trade practices.
The United States ‘Trade Representative’ announced the list of Chinese products to attract import tax. The list contains 1300 products. These include equipment for the telecom sector, robots, chemicals, LED, television, cars, aircraft parts and medical products. These mainly include the Chinese technological products and this will restrict the progress China is making in the sector, it is believed. The import value of the goods declared by the United States is said to be more than about $50 billion.
Following this, China sent a shockwave to the US with the announcement of imposition of 25% tax on 106 US products within 24 hours. The United States products soybean, sorghum, automobile sector, chemicals, aircrafts, cotton, electric cars, meat and plastic items are included in the Chinese action. Chinese sources claimed that this Chinese action has resulted in a loss of $50 billion to the US exports.
Chinese Ambassador to the United States, Cui Tiankai, had pointed out that if the United States decided on a new action in China, China was also fully prepared. Tiankai has recently warned that if the United States decided to impose new taxes against China, China will take an equivalent and strong action.’ The Chinese reply within 24 hours of the United States action, confirms the warnings made by the Chinese officials.
In view of the possibility of the trade war worsening further, China has started to explore different options. The sources in China have indicated that the US government bonds will be the most important and the final option. China had warned to sell the US bonds even during the previous financial and trade disputes.
China holds the US bonds to the tune of USD 1.17 trillion. The analysts have already warned that in case China decides to sell these bonds, it will have long lasting effects on the US as well as global level including the US economy.