Why the US would win a trade war with China

As the world’s two largest economies continued to get embroiled in what some say is an escalating trade war, American Enterprise Institute resident scholar Derek Scissors warned the U.S. will beat China the more serious the conflict becomes.

“President Trump is right about that,” he said on Tuesday during a FOX Business interview with Ashley Webster on "Countdown to the Closing Bell." “China depends much more on the American market than we depend on the Chinese market.”

In early June, the Trump administration announced its plans to move forward with a 25% tariff on $50 billion worth of Chinese goods containing “industrially significant technologies.” The president’s decision brought swift retribution, with Beijing responding in kind by slapping tariffs worth $34 billion on 545 American goods. Its tariffs, in total, will be worth about $50 billion.

It was the latest in a series of tariffs imposed by President Trump in early February. The White House had initially announced tariffs – 25% on steel and 10% on aluminum – arguing they would protect U.S. companies and allow for the creation of new manufacturing plants, one of his main promises during the 2016 presidential campaign.

When responding to fears of retaliatory policies on Twitter, Trump responded that trade wars “are good, and easy to win.”

But Scissors, who focuses on the Chinese economy and on U.S. economic relations with China, said he disagreed with the president’s logic. Instead of imposing tariffs, and hurting consumers in the process, he said the U.S. should target specific Chinese companies, like ZTE.

“I don’t agree with the president that it’s easy to win a trade war,” Scissors said. “I just think if there’s a trade war, we are going to win it.”