As US and China escalate trade war, the world asks, ‘Who will blink first?’

As United States President Donald Trump and Chinese President Xi Jinping face off in an escalating trade war that has roiled global markets and businesses big and small, the question on countless minds is who will blink first.

Trump has pummelled China with a 145-percent tariff. Beijing has retaliated with a duty of 125 percent.
On Tuesday, Trump ramped up his trade salvoes by ordering a national security review of imports of critical minerals, most of which come from China.

Earlier, Bloomberg News reported that China had ordered its airlines not to take deliveries of Boeing jets and halt purchases of aircraft-related equipment and parts from US companies, while Hong Kong’s postal service announced it would no longer handle US-bound mail.

“A 145-percent tariff will make it impossible for China to sell to the US – the costs on both economies will be exceptionally high,” Vina Nadjibulla, vice president of research and strategy at the Asia Pacific Foundation of Canada, told Al Jazeera.

“A complete decoupling is almost impossible to contemplate.”“Who will blink first depends on who can stand more pain and who is better prepared,” she added.

While Trump has long accused China of ripping off the US on trade, analysts have questioned whether his administration has a clear goal of what it wants to achieve with its tariffs.

Harry Broadman, a former US assistant trade representative and one of the chief negotiators of the WTO, said it is not clear whether Trump wants to close the trade deficit with China or end business with the country outright.

“How does Trump deal with US firms that need their goods from China for their factories to work? It’s not black and white,” Broadman told Al Jazeera.“Markets are layered through the different stages of production, you’ve got components coming from all over the world. The global economy is finely chopped up vertically, so it’s not obvious who the winners and losers are.”

Broadman said Trump’s approach to trade has been simplistic and unrealistic.

“He’s obviously a deals guy in real estate, but not international markets … How he thinks is, ‘How can I win and how can I make the opponent lose?’” he said.

“It’s not more sophisticated than that. He’s not interested in splitting the spoils. But you don’t get very far with that.”