US will lose if it starts a trade war with China

During his election campaign, US President Donald Trump threatened to impose 45 percent tariffs on Chinese imports to force China into renegotiating its trade balance with the United States. The immediate result of that would be a fierce trade war that the US would almost certainly lose. And while we don't know yet whether Trump will follow through with this threat, his abandonment of the Trans-Pacific Partnership agreement in his first few days in office is an indication that he is not shying away from his campaign pledges.

For the moment, China has decided to wait for the US to make the first move. A trade war would be problematic for the Asia-Pacific region, not least for Southeast Asia, which would be most likely to suffer the negative fallout as a major trade partner of both the US and China. But it would not be a disaster for China, mainly because the US needs China more than vice-versa.

Unfortunately for Trump, it's not the 1980s anymore. Three decades ago, the situation might have been different. China was underdeveloped, and it wanted access to manufacturing technologies. China has most of what it needs now, and what it doesn't have it can easily obtain from vendors outside the US. While the US market looked enticing a few decades ago, it is relatively mature, and today the newer emerging market economies have become much more interesting to Beijing.