'This is not a pretend trade war,' analyst says

Key Points
  • Trump announced a 25 percent tariff on up to $50 billion of Chinese goods and China unveiled retaliatory levies.
  • "This is not a pretend trade war," says John Rutledge, chief investment officer of Safanad, an investment firm.
  • Stocks fell Friday in response.
This is a trade war, says analyst

Looming trade war fears have been replaced with an actual trade war, John Rutledge, chief investment officer at Safanad, told CNBC on Friday.

"This is a trade war. This is not a pretend trade war," he said on "Power Lunch."

"This is not something where people are just bluffing," said Rutledge, who is also a CNBC contributor. "The tariffs have already gone into effect on some things and shortly will on others."

Earlier Friday, President Donald Trump announced a 25 percent tariff on up to $50 billion of Chinese goods. The levies was in response to alleged intellectual property theft.

Trump said the White House would impose even more tariffs if China decided to retaliate with duties of its own on U.S. crops or other products.

That's exactly what officials in Beijing did.

In a statement from China's Commerce Ministry, the government said: "We will immediately introduce taxation measures of the same scale and the same strength. All the economic and trade achievements previously reached by the two parties will no longer be valid at the same time."

"It is not possible for a world leader to have tariffs slapped on them in this unilateral way without responding in kind," Rutledge said.

"We're in the middle of a trade war," he said. "It doesn't look so good to me."

While Rutledge acknowledged that it takes time for trade wars to catch up with global growth, stocks still fell Friday on investor fears.

The Dow Jones Industrial Average was down around 120 points in afternoon trading, after dropping as much as 280 points. The S&P 500 and tech-heavy Nasdaq Composite were also lower.

Steve Odland, president and CEO of the Committee for Economic Development, a Washington think tank, said the tariffs are a negotiating tactic — albeit an unconventional one.

"It's not the way it's typically done," Odland, a former chairman and CEO of Office Depot, said Friday on "Power Lunch."

"I think what the strategy is here, is to put the tariffs on in order to go back to the [negotiating] table and then hopefully negotiate them all away and have fairer trade," said Odland, who is also a CNBC contributor.

Rutledge said he would "be happy if everybody was just bluffing and playing games," but pointed out that tariffs have already gone into effect on many things.

He also said that the idea that the U.S. has no other tariffs and is a completely free trade zone without restrictions is a fallacy.

"Have you ever heard of the chicken tariff?" he said, referring to a 25 percent levy on imported light trucks that has been in place since the 1960s.

"There are tariffs all over the place and nontariff trade restrictions too," Rutledge said. "We sell services as well."