Last week, the U.S. fired the latest shot in its trade war with China, revealing a list of tariffs that it could slap on $200 billion worth of Chinese goods. While China has, to this point, been matching U.S. tariffs dollar-for-dollar – both countries instituted tariffs on $34-billion of items in June — if the U.S. forges ahead, China will have to use a different, and more damaging, set of weapons.
In theory, the U.S. could place tariffs on $505 billion worth of Chinese items, which is the total dollar value of goods imported from China into the U.S. in 2017. President Trump already said he's willing to put tariffs on all these goods should the need arise on Friday. China only imports $130 billion worth of U.S. goods, so there’s no way it can match President Trump’s latest tariff threat.
That doesn’t mean it can’t retaliate, though. In fact, when it comes to non-tariff measures, it can do much more to hurt America than vice-versa, says Kristina Hooper, Invesco’s chief global market strategist. “China has a much larger arsenal of weapons than the U.S.,” she said. “Tariffs are just the tip of the iceberg in terms of what China has.”
How can China retaliate if it can’t do tit-for-tat tariffs anymore? Here are four ways the Red Giant can hit back.