Searching for smart, safe news you can TRUST?

Support safe, smart, REAL journalism. Sign up for our Axios AM & PM newsletters and get smarter, faster.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Searching for smart, safe news you can TRUST?

Support safe, smart, REAL journalism. Sign up for our Axios AM & PM newsletters and get smarter, faster.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa-St. Petersburg news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Lazaro Gamio/Axios

The United States' trade war with China is likely to last much longer than originally thought — extending well into the second half of next year and perhaps beyond, experts say.

The main reason: Neither side is prepared to appear politically weak at home, and both are ready to absorb economic pain.

Why it matters: The winners of a one-year or longer trade war without resolution are not clear, but here are some of the probable losers:

  • In the U.S.: Farmers, users of steel, and consumers. And in earning calls last week, U.S. retailers "were sounding the alarm" about yet another escalation of tariffs threatened by President Trump, reports Axios' Courtenay Brown.
  • In China: Manufacturers of all types will see business leave to neighbors like Vietnam and Malaysia, experts tell Axios.
  • For both: Economic growth will be slightly less next year, and — depending on other factors such as the psychology of stock and commodities markets — there is a small chance that part or much of the world tips into recession.

The background: Last week, the two sides boosted the tariffs to cover $100 billion in trade between the countries. As early as Sept. 6 — 10 days from now — the U.S. may substantially escalate, levying tariffs on $200 billion in trade, and Beijing is expected to strike back.

The aim: Trump says he is determined to get China to stop hacking U.S. commercial secrets and forcing American companies to disgorge their intellectual property to Chinese rivals.

  • But while that is the intellectual backdrop, politically speaking, neither Trump nor China's Xi Jinping can be seen publicly buckling under to the other.
  • And, for economic reasons, neither feels he has to. The tariffs are unlikely to inflict a killer blow. "No question it will be bad, but not calamitous" for the U.S. or China, says Adam Posen, president of the Peterson Institute for International Economics.
  • Adding to the time clock: On the U.S. side, Trump's most hawkish advisers actually want the talks to go on longer because they smell blood. They think the tariffs threaten the Chinese miracle, and want to wait for the suffering to start biting, report the WSJ's Lingling Wei and Bob Davis.

Most of the China experts who Axios spoke with dispute this thinking. Brad Setser, an expert on China's economy at the Council on Foreign Relations, expects only about a 0.5% hit to Chinese GDP next year should Trump, as he has threatened, escalate to tariffs on $250 billion of Chinese goods — or half its exports to the U.S.

  • In Alibaba's earnings call Thursday, Joe Tsai, the company's executive vice chairman, underscored this point. He said China's economic strength relies mostly on domestic demand and local investment, not exports. In terms of Alibaba's business, he said, "The world is a big place."

What's next: Ian Bremmer, president of the Eurasia Group, is forecasting the unfolding of a new Cold War next year between the U.S. and China, built on technology and foreign influence. "By the end of 2019, I suspect the biggest headlines on U.S.-China will be more focused on a changing global power balance than a direct trade war," he tells Axios in an email exchange.

  • But as things now stand, handicapping the conflict, Claude Barfield, a trade expert at the American Enterprise Institute, said that it comes down to one question: "Can the Trump administration hold out against a rising political reaction to negative fallout from tariffs versus Chinese economic imperatives and pressures stemming from a falling currency, capital outflows, and a slowing economy?"

The bottom line: There is an outside chance that the trade war spirals out of control, such as the enactment of "Buy American" procurement rules or China deciding to block U.S. ships in port, Posen said.

Get more stories like this by signing up for Bill Bishop's indispensable Axios China newsletter. 

Go deeper

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Ipsos poll: COVID trick-or-treat — Study: Trump campaign rallies likely led to over 700 COVID-related deaths.
  2. World: Boris Johnson announces month-long COVID-19 lockdown in England — Greece tightens coronavirus restrictions as Europe cases spike — Austria reimposes coronavirus lockdowns amid surge of infections.
  3. Economy: Conference Board predicts economy won’t fully recover until late 2021.
  4. Technology: Fully at-home rapid COVID test to move forward.
  5. States: New York rolls out new testing requirements for visitors.
4 hours ago - Health

Boris Johnson announces month-long COVID-19 lockdown in England

Prime Minsiter Boris Johnson. Photo: NurPhoto / Getty Images

A new national lockdown will be imposed in England, Prime Minister Boris Johnson announced Saturday, as the number of COVID-19 cases in the country topped 1 million.

Details: Starting Thursday, people in England must stay at home, and bars and restaurants will close, except for takeout and deliveries. All non-essential retail will also be shuttered. Different households will be banned from mixing indoors. International travel, unless for business purposes, will be banned. The new measures will last through at least December 2.

Updated 5 hours ago - Politics & Policy

The massive early vote

Illustration: Sarah Grillo/Axios

Early voting in the 2020 election across the U.S. on Saturday had already reached 65.5% of 2016's total turnout, according to state data compiled by the U.S. Elections Project.

Why it matters: The coronavirus pandemic and its resultant social-distancing measures prompted a massive uptick in both mail-in ballots and early voting nationwide, setting up an unprecedented and potentially tumultuous count in the hours and days after the polls close on Nov. 3.

Get Axios AM in your inbox

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!