The Trade War Enters a New Phase

Digital indicators suggest observers are bracing for a protracted, uncertain conflict.

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This month, the US-China trade war escalated. After talks broke down, Washington announced it would impose additional tariffs on Chinese goods and it effectively banned Huawei, the massive Chinese technology company, from conducting business in the United States or with US firms. Sino-American trade tensions have been simmering for more than a year now. But Predata signals suggest this latest round of escalations put the bilateral relationship in uncharted territory.   

Predata measure of collective anxiety over US-China trade tensions is at its highest level since March 2018, when Trump first imposed steel and aluminum tariffs. That move, the first material step in the trade war, introduced the prospect of a protracted tit-for-tat with Beijing. After a temporary reprieve and negotiations in the winter and spring, talks broke down in May and the Trump Administration announced additional tariffs on $200 billion in Chinese imports. Though Washington had imposed tariffs at other points in the last year, none of those resonated to such a degree in the digital realm as these latest tariffs. Observers, it seems, believe this is a new and foreboding escalation.

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In addition, the latest tariffs appear to have sparked greater scrutiny of China’s domestic economy. A Predata signal that tracks online activity related to various industrial and energy sectors, particularly those affected by Beijing’s efforts to develop advanced industries friendlier to the environment, has risen to its highest level of the year. As of yesterday, the signal was continuing to climb. That’s a sign that the latest developments related to the trade war -- the breakdown of talks, the new tariffs, and the US decision to restrict Chinese tech giant Huawei’s access to the United States market -- are prompting observers to consider to an unprecedented degree how Beijing’s economic agenda will be affected.

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Taken together, the Predata signal activity indicates that in the mind of the online community, the trade war is entering a new phase.