China’s most recent retaliation raises the stakes, but it does so within what are now relatively predictable parameters.
The latest tariff hike follows the pattern we have seen throughout the week, when Chinese retaliation has exactly matched what Donald Trump has done.
There is, however, one key difference to the announcement this time.
China has said that anything further is just a “numbers game” and they will simply ignore any subsequent raises from Trump.
There’s a sense they are calling time on what has felt like a relentless tit-for-tat escalation.
They are right, of course.
Once tariffs exceed 50% or so, trade is basically impossible anyway and the numbers don’t make any substantive difference.
But there are big questions about whether this move successfully enforces a stalemate of sorts.
Trump could either just leave things as they are (perhaps with a nominal raise in the tariff numbers so he can be seen to have the last word), or he could opt to raise the stakes by invoking some other form of non-tariff measure on China.
Read more: The more ‘nuclear’ option China could pick in trade war
Regardless of whether any such measure was economic or political, China would almost certainly want to be seen to respond – and escalation over non-trade issues has the potential to be far more dangerous geopolitically.
Even in the event of a stalemate, whether either side is in the mood to come to the negotiating table is another matter altogether.
A truce makes it marginally more likely, but trust between the two is arguably at an all-time low and this moment still feels perilous.
