A Lose-Lose Trade War

  • Assuming rational actors, a further escalation in the US trade war with China doesn’t make sense, as the upside is limited and the potential downside rather large.
  • It is rational only if one assumes the US believes the damage to China is much bigger and so it will be the first to cave.
  • It could also be just political posturing, as economic nationalism seems to be popular with the Trump base.

Source: A Lose-Lose Trade War | Seeking Alpha