Trump’s war of words on China is so much hot air

IN ALL the fire and fury these days between China and the West, it’s easy to predict the worst will happen.

The temptation is to gallop away with the idea that the US will end up treating China as a pariah state akin to Iran. Trade and currency links will be severed accordingly.

But, even in a week that saw Downing Street flip-flop to ban Huawei at Donald Trump’s behest, we should not get so carried away.

For all the bombast coming out of the White House since China announced its security laws on Hong Kong, his actual policy actions have been muted.

So, while this week he ended Hong Kong’s tariff discount over China for goods to the US, the impact is minimal — most HK-US goods are in transit from China so pay the higher tariff already.

While he slapped visa bans on Chinese officials, he did so when barely any were planning on going to the US anyway.

The most meaningful move he could have made — reneging on the trade deal he signed in January — remains intact. Explosive talk from “sources” in the Trump camp last week that he could remove the US dollar peg to the Hong Kong dollar today fizzled out as just that — talk.

The fact is that Trump can’t afford to launch a real Cold War like his predecessors did against Russia.

Moscow’s empire was economically puny and selfcontained, making it an easy enemy. But China is the second biggest economy in the world, inextricably linked in supply chains for pretty much every material aspect of western life. Any meaningful attack on China trade would hurt the US more.

So, all Trump can do is huff, puff, and lean on his weaker allies to make irrational decisions to boycott firms like Huawei.

It’s galling for countries like ours to have to suck it up, and no doubt we’ll be more prone to US bullying after we leave the EU. But it’s better than a real trade war.