After six months China is breathing more easily than America, for three reasons. First, it has proved able to withstand American coercion and deft at retaliating, achieving what is known in the jargon as “escalatory dominance”. Some of Mr Trump’s critics attribute this to TACO (Trump Always Chickens Out). It also reflects China’s underlying power, preparation and skill. The “Liberation Day” tariffs imposed by Mr Trump on China in April were reversed after Wall Street slumped. Recently, after China imposed limits on exports of the rare earths used in high-tech manufacturing, Mr Trump threatened 100% tariffs, only to back down again. His threats to cripple China through a near-total embargo are not credible because doing so would damage America, too. Those who assert that China is in crisis should note that this year its stockmarket has risen by 34% in dollar terms, double the rise for the S&P 500 index.
Why China is winning the trade war
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