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President Trump has announced this Monday to become the first day of the trade war between the United States and China. Chinese president Xi Jinping was notified three days in advance about the upcoming response to unfair trade practices.

Trade War Is Coming

The American investigation into international trade policy perpetrated by the Chinese government will become the official casus belli for an escalating conflict. The investigation will be open under Section 301 of the Trade Act of 1974. According to the US officials, China violated intellectual property rights and forced technology transfers, that hamper business operations of the American companies in the region.

It is not yet clear how China will react to this measure. The only official response it has provided so far is a call for peaceful negotiations. “We would like to emphasize that the Chinese government has always attached importance to intellectual property protection,” a government representative said. “The results are there for all to see.”

On the national level, however, Chinese media signaled readiness to counter any trade limitations imposed by the West. The trade war has not yet begun but it does not look avoidable.

Economies of the United States and China, as well as their allies and trade partners, can be negatively affected by the upcoming standoff. The exchange rates of the USD and the CNY are likely to depreciate amid conflict.

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