How much damage will China's new tariffs on USA imports can do to the USA economy?

https://m.washingtontimes.com/news/2018/mar/22/china-retaliates-tariffs-us-imports/

The losers in this action by Trump will be the industries that depend on steel and aluminum which will face higher prices. That means some of the nation’s largest industries: automobile, aircraft, heavy machinery and heavy equipment manufacturing industries. These manufacturers that use steel and aluminum for their products are significantly larger than are steel and aluminum producers. Statistically, steel imports are only about one-third of what US industry needs and so, the tariff would not apply to domestic steel production. Aluminum is a different matter for only 10 percent is produced domestically.

WTO RULES

The World Trade Organization (WTO) agreement states that countries are free to take actions they consider critical to their security interests. However, WTO members are very cautious about using this provision because of the dire consequences to trade and the implications it can provoke. It follows that China, India, Brazil and other countries are just as capable of making such fake claims based on similar national security rationales for restricting imports. The provision of law that Trump is relying on for the imposition of this new tariffs is “Section 232 of the Trade Expansion Act of 1962 which allows imports to be blocked on national security grounds. “Previous administrations had interpreted the provision narrowly, requiring evidence that the military needs or strategic industries could not be supplied by U.S. production. The US Commerce Department under Trump is disregarding a half century of precedent by finding that steel imports coming from the most-trusted U.S. allies, such as Canada and the EU need be taxed. The risk assessment of Trump’s action is hard to quantify for the affected countries can easily retaliate by imposing tariffs on American goods. Moreover, tariffs could be imposed on targeted goods in order to cause economic and political sting. American exporters of all economic sectors should be weary of steps that might follow whether they are exporters of agricultural products or aerospace vehicles for once wars is started it is impossible to predict how it will end as history indicates from the 1930′s world economy experience. The invocation of national security concerns by Trump could be used as a precedent in which other nations might be willing to use national security as grounds for tariffs, and thus, neutralizing the ability of the World Trade Organization to arbitrate disputes. Whether a hot war or a trade war neither case is as easy as Trump claims it to be for our historical record indicates that wars in general have been started by either madness or stupidity.

In “The Art of War,” Sun Tzu states that "Every battle is won or lost before it's ever fought". Détente was used during the cold war for easing strained relations, especially, in using the threat of a pre-empty attack. Today, a battle space has many dimensions which now include cyberspace. The defensive plan may not survive first contact with an adversary, but the general staff will quickly formulates a new plan and adapt making the evolving plan a part of the plan as the pieces move before the actual battle begins. In this scenario, it would be foolish to predict the outcome of a battle where the enemy is fully committed to fight back in any way they can and with whatever resources they muster together. China today is not an underdog to be bullied.

A report last week states that China’s government is contemplating reducing its purchases of U.S. treasury bonds and briefly rattled financial markets. Against the tensions between the two countries, it was widely understood as a warning that aggressive American action on trade might jeopardize the willingness of China to subsidize the drunken spending of the U.S. government.

China is now, and has been for a decade, the largest foreign buyer of U.S. treasury debt, with Japan being a close second. The Chinese central bank has halted new purchases and sold old holdings, each time the Trump administration rattles noise about China, which triggers concerns in U.S. economic

China’s foreign currency reserves now stand at more than $3 trillion. In contrast, the U.S. has foreign exchange reserves that hover at around $120 billion. Trump’s tariffs would automatically trigger penalties against the U.S. in the World Trade Organization (WTO), and might even lead to serious disruption of WTO’s years of negotiating or total collapse, which would inevitably lead to higher world tariffs against U.S. exports. Even if it doesn’t take place immediately the sense of turmoil to come would be enough to trigger dire uncertainty for American business and employment. China, on the other hand with a centralized party government system has a better probability of surviving the hard blow of global trade disruptions.

“The only way to deal with a trade deficit is raise savings and investment rates,” Lardy said recently, referring to the reason deficits occur. In other words, Americans are consuming and spending more than they produce.” Lardy continues “It’s a strategy that’s almost certain to fail, that’s because U.S. trade deficits are largely the result of the shortfall in national savings relative to investments — a long-running imbalance that isn’t likely to change any time soon. Everything is working against Trump’s announced objective.”

Trump Tax Cuts are a Walk on the Brink

Can America under Trump win a trade war with China? One option to be considered might have a nuclear effect on world economy and that is— China’s dumping US debt and replacing its dollars holdings with another reserve currency. By planning to add to the bulging US debt newly printed $2 trillion dollars, the GOP is putting the US at the mercy of its debtors mainly China and Japan. Trump, ignorant of world economics hinted he wanted to renegotiate the US debt during his electoral campaign which was quickly walked back. Nevertheless, in the eyes of other world leaders Trump’s views of a US empire able to do as it pleases and seeking to negotiate sensitive world problems with the same grandiloquence and bully in the room as he negotiates a land deal or a new hotel with a weaker side is totally irresponsible conduct for his handlers.