“Everyone loses when the world’s two largest economies slap tariffs on each other. The slump to 2.1% growth in second-quarter U.S. GDP unveiled Friday was attributable largely to stalling business investment due to trade war-fueled uncertainty. And in China, where growth has slowed to 6.2%, a similar pattern has emerged. The fallout is more chronic than acute. In sports terms, the injury is more like a concussion than a blown-out knee. Tariffs sting. But the bigger blows are hits to investment, confidence and growth.”
Shawn Donnan, Bloomberg

“Chinese retaliation has hurt [American] manufacturers such as Boeing Co., Caterpillar Inc. and Deere & Co… U.S. manufacturing employment has barely accelerated from the pre-Trump trend, and hasn’t even made up the ground it lost in the Great Recession, much less reversed the drop since China entered the WTO… in economic terms, Trump’s trade war has been a loss on every front…

“[But] In parallel with Trump’s tariffs, the U.S. has been waging a different sort of trade war against China aimed at reducing Chinese dominance in cutting-edge technology industries… The swift and devastating impact of export restrictions on China’s Huawei Technologies Co. shows the effectiveness of these [policies]. Thus, even though protectionism has hurt the U.S., it may have hurt the U.S.’s chief rival even more. Whether that is worth the cost depends on one’s view of geopolitics and the importance of continued U.S. hegemony.”
Noah Smith, Bloomberg

“The Trump administration’s China strategy…  is effectively to crash the Chinese economy. Placing tariffs will not only make the country’s products more expensive for Americans to buy, but will also induce multinational corporations to move their manufacturing plants and offices to other nearby countries… So while Trump wants to make a deal with Xi — partly to end China’s theft of American intellectual property and other aggressive trade practices — he’ll settle for destroying China’s economy in the meantime.”
Alex Ward, Vox

“This move comes at a sort of odd time. The U.S. economy has been looking fragile lately—bond markets are screeching in panic, GDP has slowed a bit, and business investment is drying up. Just about everybody agrees that Trump’s trade war is contributing at least somewhat to the uneasiness… Now Trump has gone and ratcheted up the conflict, which means Americans will pay even higher taxes on imports and that there will be more uncertainty for businesses trying to figure out their supply chains. It will almost certainly be bad for the overall health of the economy…

“One possibility is that Trump simply isn’t worried about the effect that his tit-for-tat with China is having on the economy and just wants to keep fighting it to the bitter end… But it’s also possible that this move is partly meant to scare the Fed into taking more action than it did Wednesday. Many investors (as well the president) were hoping that Powell would signal that the Fed intended to pursue an aggressive series of rate cuts.”
Jordan Weissman, Slate