If a trade war with China escalates, David Dollar, a Brookings Institution fellow and former U.S. Treasury envoy to Beijing, said the American farm sector could be hit hardest. | Getty Images POLITICO Money Podcast How a Trump trade war with China could whack the U.S.

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President Donald Trump’s plan to slap as much as $60 billion in tariffs on imported Chinese goods could eventually trigger a trade war that slams American farmers, according to a leading expert on the U.S.-China relationship.


David Dollar, a Brookings Institution fellow and former U.S. Treasury envoy to Beijing, said in the latest POLITICO Money podcast that Trump misunderstands the nature of the U.S. trade relationship with China — and that a trade war could badly damage the American economy.

“I think the argument that we are losing out to China — that they are cheating everywhere — I think that’s overblown,” he said. “The administration focuses a lot on the imbalance in the relationship, and that’s not really a very useful metric. The trade balance is largely a macroeconomic variable. In the case of the U.S., we don’t save enough, so as a result we run a trade deficit.”

If a trade war with China escalates, Dollar said, the American farm sector could be hit hardest.

“What you would find in a serious trade war is much reduced demand, including for U.S. agricultural products,” he said. “Farm prices would fall and maybe even collapse. You could definitely see the economy going into recession if the trade war were serious enough.”

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Celeste Drake, trade and globalization policy specialist at the AFL-CIO, argues on the podcast that fears of a trade war are overblown and that tariffs are a useful weapon against China.

“We think that trade enforcement is always a good idea,” she said. “If you are going to have rules to try to establish a level playing field on trade, then they are not rules at all if you don’t enforce them.”