Trade War: Real or Phony?

Is the Trade War a bunch of hollow threats, like the Germans threatened the French for a war during the 2nd world war, or will it have a reasonably long lasting impact on the global trade and growth across regions. Studies suggest that the current sanctions imposed by the two nations will have insignificant impact on the global economy over the medium and long term. Additionally this event is perceived as an opportunity by many emerging countries to enhance their trade volumes with the two superpowers. Previously US and China within themselves made for almost 10% of the global trade, thus a dispute between them makes other countries competitive in the international trade.

Having said that, though the global economy might remain unaffected but the series of tariff hikes are detrimental for both the economies. US economy is anyways overheated and has started correcting to stable equilibrium levels but China is sitting on loads of debt which makes it highly susceptible to a crisis. In US, we recently witnessed a stock market rout, which was primarily driven by an anticipation of an economic cycle downturn and rising import cost and diminishing margins.

China has not yet retaliated to the sanctions, but will soon start selectively exporting goods to US. It is astonishing to see the Chinese exports rise even during tariff hikes, which clearly indicates indispensable dependence of US on Chinese products. Trade war definitely demonstrates the power of US over any other nation. Iranian oil sanctions led the whole country into doldrums, and again it was because of US international affair decisions.