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As Trump continues to use tariffs to push his foreign policy agenda, some are starting to worry that we might be headed for a trade war with China. The reality is, a deal will likely be struck before a full-scale trade war breaks out.
Lone Star College Economist Hank Lewis says that China relies heavily on the American economy, and that would likely bring them to the table. He said, "There's a real need to keep the trade flowing. The last thing China needs is having one of its largest customers trying to find workarounds, because that's going to cost them money."
He went on to say that if a trade war did break out, our ability to produce goods would be a major factor in how it plays out. He said, "Can we produce the volume needed? Can we get the infrastructure set up to do that, so that we hopefully would not face a lot of inflation in the short term?"
According to Lewis, the U.S. has a short-term advantage, but in the long term, inflation would be a major factor. That's one of the reasons he doesn't believe a full-scale trade war would last more than a few months if it actually happens at all.
He thinks both sides will be highly motivated to work out a deal because both sides will be losing too much money.