Workers at a Foxconn factory in Wuhan, Hubei province, China, August 2012.
Darley Shen / REUTERS

A month into U.S. President Donald Trump’s trade war with China, the conflict has generated only a flurry of rhetoric and threats, but further escalation looms. Both sides are close to implementing tariffs on another $16 billion worth of goods, and the United States looks prepared to impose tariffs on a further $200 billion worth as early as the end of August. So far, investors seem to see these tensions as temporary and believe that they won’t damage the overall U.S. economy. The stock market has barely budged, and futures prices for steel and agricultural goods caught up in the conflict show that traders expect prices to return to more normal levels within the next six to nine months.

Yet the most important question is not how long the trade war will last but whether the U.S. frustrations that sparked it in the first place will be

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  • SCOTT KENNEDY is deputy director of the Freeman Chair in China Studies and director of the Project on China Business and Political Economy at the Center for Strategic and International Studies.
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