The markets are reeling a bit today and bond yields are falling on news of escalating trade war threats.

China pledged to strike back on Trump's announcement of $200 billion worth of tariffs on Chinese goods. But before China could even respond, Trump threatened to put a tariff on all goods from China in belief the US Can Win a Trade War With China.

Peter Navarro, a White House trade adviser, said on Tuesday morning that the United States had given China numerous opportunities to negotiate and change policies that have cost Americans millions of jobs, and the Trump administration was now prepared to impose tariffs on $450 billion of Chinese goods in order to force Beijing to bend.

“President Trump has given China every chance to change its aggressive behavior,” Mr. Navarro said in a call with reporters. “China does have much more to lose than we do,” he added, saying that a trade clash would affect China much more than the United States, given China exported nearly four times the value of goods to the United States last year than the United States sent back.

"Winning" Defined

Trump has a peculiar definition of winning. If the US loses less than China, that's called "winning".

US Goods Exports to China

Fred does not have a similar chart for US imports to China.

How can China impose like tariffs? Answer: It can't, directly, on goods as shown by the following Census Department Foreign Trade Charts.

US Goods Trade With China in 2018

US Goods Trade With China in 2017

In 2017, China imported about $130 billion in goods from the US. The US imported $505 billion in goods. The US has a small trade surplus on services.

The charts show China will have a difficult time retaliating if Trump does indeed place tariffs on all goods from China.

Lose-Lose

It is on this lose-lose basis that Trump expects to "win".

Note that "winning" will increase costs of all US manufactured goods that use any parts from China. In regards to steel alone, the US has about 140,000 steel production jobs. The US has about 6.5 million jobs that depend on steel.