I think we've seen the opening shots in a trade war between the world's two largest economies today. We've had Donald Trump announce tariffs on $50bn in imports from China, and very quickly within a matter of hours, we've had the Chinese announce the same. We've got everything from bulldozers from China and jet engines and semiconductors to soybeans from the United States in the line of fire.
You know, we've been gearing up for a trade war in the last few months, and there's been some debate as to when that war was going to start. Well, today's the day. We are in a trade war.
The big fear right now is that we're going to move into a period of tit-for-tat tariffs, that things are going to escalate. Already, the Trump administration - Donald Trump in his statement today said if the Chinese retaliate, we'll come back with more. And we know that over at the US Trade Representative's office, they've been working on $100bn list of tariffs. The Chinese have said they would come back with their own same scale retaliation.
And that's the risk in a war, is that once you go down that path, it's a path that leads to escalation. We see a kind of rhetorical trap that people fall into of it's not my fault, it's his. There's so many different analogies that you can throw at this, but the war really is the best one. Once something starts, it's a lot harder to stop than it is beforehand.
We see no signs that the Chinese and the Americans are going to sit down and talk this out at any point soon. At one point today, Donald Trump said hopefully his very good relationship with Xi Jinping would help rescue this. But I'm not sure that that's the case. I'm not sure that that relationship is going to look so good by early next week.