Chart of the Week: Unconventional Warfare

As mentioned in previous editions of our weekly charts, the current trade dispute has massive implications for both China and the U.S.; however, to this point, much of the tit for tat retaliation has been in the form of tariffs on the opposing country’s imports.

Chart UnconventionalWarfare

The chart above suggests that China will at some point have to put their sights on something other than U.S. imports. The reason for this being that China imports almost $200 billion in U.S. goods, while the U.S. imports more than 2x that amount from China. Therefore, if the tit for tat retaliation continues, China will eventually have to target something besides U.S. imports. This does not bode well for the U.S., because if China is backed into a corner they have weapons that could have devastating economic impacts, such as unloading large amounts of U.S. sovereign debt. The recent round of tariffs on $200 billion of Chinese imports have not been finalized, so there is still hope that the trade war escalation may not materialize. However, we are keeping a close eye on the trade tensions and the effects they will have on the economy.