General Discussion

China needs us as a trade partner as much as we rely on them.

Their economy is wobbling badly right now, with a $1.4 trillion relief package needed six months ago to shore up their local government debt crisis. Things haven't improved since.

They desperately need to maintain a steady flow of external capital and keep a high functioning economy to survive their current debt crisis. A hard recession would be a double whammy - defaults on bad debt (especially LGFVs) at the local level would force another, even larger federal bailout. This would happen at the same time as their currency would be plunging, deterring foreign buying of yuan denominated debt. China might be sitting on 3 trillion in foreign reserves, but the LGFV debt mountain alone is 4x more than that.

So there is a real chance China might blink.

The problem is this will be absolutely ruinous to our economy as well if it plays out. Trump's crew are betting China will flinch first and fast. It might every well happen.

But this is like going to a casino and betting your life savings on a single hand of poker. It might work out for you, but it's insanely risky and an appallingly bad idea.