Taiwan Play: Trump Knows China Needs Us More than We Need Them

Although China, with its huge Treasury bond holdings, was seen during the Obama administration as having a strong hand in trade negotiations, President-elect Trump is aggressively communicating that the need for access to U.S. consumers is China’s weakness.

George Friedman of Geopolitical Futures in a new report concludes that:

China is more economically dependent on the U.S. than the U.S. is on China. This is because the U.S. is not wholly reliant on China for any strategically important commodities or products, the U.S. has significant extra capacity in many of its manufacturing sectors, and the U.S. is resilient to Chinese retaliatory moves.

Despite the U.S. depending on imports of cheap Chinese products and certain commodities, such as rare earth elements, America could quickly find alternatives if necessary. In a trade war between China and the U.S., both would suffer short-term consequences, but China would feel the impact of U.S. protectionist measures much more and for far longer than the U.S. would feel any economic retaliation.

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