Who Will Win The Trade War - Trump Or China?

Donald Trump unilaterally started a trade war with nearly the whole world. Currently, he has imposed a 10% tariff on nearly every country in the world - including some islands that are not populated with any humans (only penguins).

But the biggest trade war is with China, and it is the one that will likely affect Americans the most. 

Trump has imposed a 145% tariff on goods imported from China. He claims that China is negotiating with his administration to lower the tariffs.

China has retaliated by imposing a 125% tariff on goods from the United States. They have also banned the shipment of rare earth minerals and rare earth magnets to the United States - which are needed to make  many goods in the United States (including items for our military). And China has also cancelled purchases of agricultural products from the United States (like pork and soybeans). 

And China is denying that any negotiating is happening. I believe them.

China seems to have made the decision to just wait Trump out. They believe he will fold. And they have solid reasons for believing that. Trump has already backed down several times - including on electronics (like iPhones) made in China.

Trump likes to use an analogy of who is holding the best cards. In this situation, it looks like China is holding the best cards - including some Aces. Importing the rare earth minerals and magnets is critical, and the U.S. can't go long without them. Farmers had not fully recovered from Trump's first term tariffs on China, and this may be the end for many of them. And rising inflation is going to be a big problem due to the Trump tariffs.

Trump doesn't like to admit he made a mistake (and rarely does it). But he's painted himself in a corner with the ridiculous and unnecessary tariffs. He may try to paint it as a victory, but Trump will be forced to back down. The only other option is stagflation (rising inflation combined with a recession), which would be disastrous for his Republican cohorts and his own poll numbers (which are already dropping like a rock).

Trump is going to lose this trade war with China. Let's hope he gives in before he craters the U.S. economy.