The United States may hold quite a few cards in its trade war with China, but the eastern economic powerhouse also has other options to explore. As is usually the case in stand-off such as this, aggression only drives your rivals closer together. The United States may have dealt China a blow by coming down hard on Chinese telecommunication giant Huawei and its emerging 5G technology in continental North America, but the race for the technology is on in the rest of the world.
The battle lines are becoming increasingly stark. On Friday China’s Xi Jinping and Russia’s Vladimir Putin hit back at US global economic dominance as they took the stage together at Russia’s showcase business forum. While the denunciation of the “rhetoric of trade wars and sanctions” is standard fare that was to be expected, Putin called for rethinking the role of the US dollar in global trade – something that should concern the United States a deal more. China, fast become a major buyer of oil, is hard at work building an alternative to the Dollar backed oil economy by promoting the Yuan as the currency of choice for deals with China. Russia’s support in this matter – which is itself a major player in the energy market – is critical to the success of such plans and should make the United States sit up and take notice. A similar cooperation can also been seen in the field of 5G; US’s aggressive actions have forced both countries to strengthen their technology sharing in these emerging feilds
By taking an aggressive posture the US is precipitating retaliatory actions. Even if China and Russia do not take direct actions – such as the threatened stoppage of rare earth element trade to the US – the US is effectively locking itself out of regions that fall under the Russo-Chinese sphere of influence. This trade war will not bring easy victories.