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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

20 mins ago - Sports

Suni Lee wins bronze medal in uneven bars

Photo: Laurence Griffiths/Getty Images

U.S. gymnast Sunisa "Suni" Lee won her 3rd Olympic medal on Sunday, taking home bronze in the individual uneven bars event.

Driving the news: Also on Sunday, U.S. gymnast MyKayla Skinner won the silver medal in the vault on Sunday after stepping in for Simone Biles, who withdrew from the event to prioritize her mental health and well-being.

Updated 1 hour ago - Sports

The Olympic events to watch today

U.S. diver Krysten Palmer. Photo: Clive Rose/Getty Images

5 events to watch today...
  • 🏃 Track & Field: Watch the men’s 100m final at 8:50 a.m. ET on nbcolympics.com
  • 🏐 Men’s volleyball: USA plays Argentina in the group stage at 8:45 a.m. on NBC.
  • 🤸 Gymnastics event finals: Watch the replay of the men's floor exercise and pommel horse, as well as the women's vault and uneven bars starting at 9:30 p.m. on NBC.
  • 🤽Men's water polo: USA takes on Greece in group play at 10:30 p.m. ET on CNBC.
  • 🏊Women's springboard final: Watch the replay tonight on NBC.

In photos: Tokyo Olympics day 9 highlights

Team USA's Ryan Murphy, Zach Apple, Michael Andrew and Caeleb Dressel celebrate winning gold in the final of the men's 4x100m medley relay swimming event during the Tokyo 2020 Olympic Games at the Tokyo Aquatics Centre in Tokyo on Aug. 1. Photo: Odd Andersen/AFP via Getty Images

Day nine of the Tokyo Olympic Games Sunday saw the final day of swimming competition end with a historic win for Team USA.

The big picture: The U.S. men's 4x100-meter medley relay team set a new record world as they won the final and Caeleb Dressel earned a fifth gold — becoming the fifth American to do so. Team USA's Bobby Finke won the 1,500-meter freestyle.

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