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China Issues a Trade War Threat Using War Language Not Seen Since 1979

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The phrase “Don’t say we didn’t warn you” may be a cliché in English but the Chinese equivalent is anything but.

The Chinese used this phrase in 1962 just before they went to war with India. They used it again in 1979 just before they went to war with Vietnam. And they just used it for only the third time in over 50 years against the United States, according to this article.

The context, of course, was the U.S.-China trade war. Events are moving so quickly in this war that it’s hard to keep up with the news.

The threat was used in the context of an ominous warning about China’s ability to retaliate against U.S. tariffs on Chinese exports that have been imposed by the Trump administration. China cannot match the U.S. tariff for tariff for the simple reason that the U.S. imports far more from China than they import from the U.S., so they simply run out of room to put on tariffs.

China is already there. Trump can still tariff another $200 billion of Chinese goods (and has threatened to do so) and China has nothing left to tariff. But China has many non-tariff responses including dumping Treasury notes, cutting off exports of rare earths, restricting U.S. foreign direct investment in China and diverting import orders to competing suppliers in Europe and South America, among other tactics.

The real meaning of the threat is that the trade war has far to run and will end up affecting more than just trade. Let’s hope the threat doesn’t extend all the way to a shooting war as it did in the cases of Vietnam and India.

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