The trade conflict shows no signs of abating and indications now point towards a deepening of the tensions.

Steve Hanke, an expert in applied economics at John Hopkins University, suggests that the situation might worsen beyond initial expectations.

Both the US and China seem resolute in their key demands, painting a grim picture of the political landscape. Hanke draws parallels to the strategies employed against Japan in the 1980s by the Trump administration. Yet, the circumstances differ significantly this time. Unlike Japan, China’s scale and global economic relevance make it a formidable trade partner. Hanke explains, “They think they can do the same thing, the US, to China, but number one, China is a huge country, much bigger in relative terms than Japan was in the 80s and 90s, and we have a big bilateral trade deficit with China. Now, the Chinese, not only are they big, they’re communist…they’re not going to be humiliated, the Chinese have a different history than Japan, and they’re not going to be beat around like the Japanese were in the 80s and 90s.”

The contrasting natures of Japan and China exacerbate the situation further, aggravated by the precarious political climate. While the US leadership is pushing for substantial trade alterations, China – faced with a declining trade environment due to the ongoing dispute – cannot afford to appear weak.