Editor’s Note: Guest columnist Edward Alden is filling in for Kimberly Ann Elliott this week.
The trade war between the United States and China has entered a new and dangerous phase. Both countries have moved from using tariffs and other trade sanctions in a reasonably strategic fashion in order to try and strengthen their negotiating position into a series of punitive measures designed to inflict significant economic harm on the other. As markets signaled last week, with stocks taking a roller coaster ride and bond yields plunging, the risks of an unconstrained economic conflict have risen substantially.
Like all wars, trade wars are easier to begin than they are to end. They can start with limited, rational objectives, but if these fail to be achieved, leaders almost invariably see escalation as preferable to humiliating retreat. The result is a costly and damaging conflict that no country intended nor wanted.