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Opinion

Xi risks losing face in a trade war with Trump

Beijing must choose between a humiliating retreat and a dangerous economic conflict

| China
Conflict or concession - China's President Xi Jinping must decide on how to respond to US president Donald Trump.   © Reuters

With the imposition of 25% tariffs on $68 billion worth of their merchandise trade ($34 billion of exports each), the U.S. and China have fired the first salvos of their trade war.

If one were to borrow a military analogy, the first round of the U.S.-China trade war is either a skirmish or a probing attack, as the amount of the two-way merchandise trade affected by the tariffs is about only 10% of the total U.S.-China trade. But everyone knows that the main battle will be joined soon. Besides the additional $32 billion merchandise trade targeted for punitive tariffs ($16 billion of exports for each country), U.S. president Donald Trump has threatened to retaliate by levying tariffs on all Chinese exports to the U.S. ($505 billion in 2017).

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