The return of trade war between the US and China is likely to lead to world recession

The much-hoped-for commercial truce between the US and China not only moves away but the danger that it cannot be reached is very concrete, at least in the short term. Last week's move by Trump, which evidently wished to exacerbate the dispute with unscrupulous tactics, imposed new duties on Chinese products for about 300 billion dollars: the result is that all exports from Beijing to the United States have been subjected to even higher customs tariffs. Probably in the tactics of the White House there was the will to reaffirm American supremacy and the intention to rebalance a commercial balance considered too much in favor of the Chinese, essentially to defend American products. Not to expect, however, a reaction from the Beijing government seems to be a wrong assessment due to an excess of security and supremacy of great power, which does not appear to be justified against the Chinese country. Beijing, even if it denies it publicly, has made a devaluation of its currency, which has fallen to a rate below the value of seven yuan per dollar. Despite the official denial of the Chinese Central Bank, it does not seem possible that this response comes directly from the Beijing government, as a direct reaction to Trump's measures. From the reactions of the American president, one cannot fail to grasp a mixed surprise anger, which has targeted China, explicitly accused of manipulating foreign exchange. The signal sent by Beijing contains a double meaning: the first constitutes, within the deteriorated scheme that has now been established between the two countries on the subject of trade war, of the obligatory and obligatory answer that wants to emphasize how China does not intend to show itself fearful with regard to American equities, the second appears to be of a more technical nature, and represents the intention to make exports of American products to the Chinese country more complicated, due to the rise in the price caused by the depreciation of China's currency. The articulation of the Chinese response was not limited to the mere devaluation of the currency, but also concerned the blocking of American agricultural products, which, mostly come from the federal states where Trump receives the greatest approval. In general, the policy of American duties, which could have had some justification on specific issues, seems to have been implemented in an exaggerated manner, compliant, moreover, with the scheme that Trump has established in international relations: using a tactic where the initial action is always oversized , to then reduce in parallel with the achievement of the objectives. This scheme can work, but not always, with weaker subjects, for questions related to armaments and problems related to diplomatic disputes; but it cannot function in the economic field with stronger subjects such as Europe and even less with China, which has a series of response possibilities capable of showing all the limits of Trump's action. The concept is that the exasperated action preferred to diplomacy and negotiation produce unfavorable situations for both in contenders, which, in the economic field, have global repercussions, risking to trigger a world recession. Moreover if the Chinese responses have caused suffering for American industries, the devaluation of the yuan will have equally difficult consequences for Chinese companies, which are indebted in US currency and which will have serious repercussions on their financial structures. China has sacrificed the control of devaluation to have a stronger response to Trump's commercial duties, but this can trigger, already in the short term, a capital flight, to which Beijing can respond by injecting other currency into the system, thanks to the great availability however, there is always a high level of indebtedness of local institutions, which is not counted in the national public debt and which can be a factor of strong destabilization if the incidence of the high value of the dollar on the Chinese system remains for long time. It is clear that in a situation of continued stress the effects on the global system of the dispute between the two major economic powers, could cause victims among countries with financial problems and send even the most prosperous economies into recession, which are already experiencing signs of compression of growth. A point of concern, which determines the persistence of this scenario, is not appropriate to anyone, except to isolated speculators: but this does not seem to be the goal of Washington and Beijing, which will have to revise their political objectives to avoid damaging the economic ones; not only their own but also their allies.