US-China trade war after new Trump presidency could affect Bitcoin

Fresh off the presidency, Donald Trump, who has frequently accused China of sucking American jobs, has proposed suing China to resolve trade cases alleging unfair subsidies and currency manipulation. He has also proposed tariffs of up to 45 percent.

“We cannot continue to allow China to plunder our country, which is exactly what they are doing,” he told supporters in May.

“We are a greater economic power than China, and people don’t understand that,” Donald Trump said during the presidential campaign.

If Trump chooses this approach, China will fight back – it even says so itself. This will push China toward another nearby ally, Russia. And Russia’s anti-Bitcoin stance will spread to China’s leaders, cracking down on Chinese Bitcoin miners (70% of Bitcoin transactions are processed by China’s four largest mining pools) and currency traders, as reported by the media earlier this month.

Russian lawmakers suggested in 2015 that Bitcoin was part of a U.S. plot to undermine Russia. “All these cryptocurrencies were created by U.S. intelligence agencies just to support terrorists and revolutions.” Bitcoin miners may be affected, and U.S. businesses will certainly be affected.

“Then China will take targeted measures,” the Chinese government wrote in the Global Times on November 13.

This means that American companies are likely to face a reaction from China, which is bad for stock markets and the dollar, which in turn puts pressure on gold and silver, and one could reasonably argue that this is also the reason why Bitcoin has continued to perform well so far – the best performing asset in 2016. As Global Times writes, the era of American cars, iPhones, soybeans and corn is over.

Victims of the China-U.S. trade war include Starbucks, Boeing and Apple, as well as companies that have placed big bets on China.

The notion of a trade war has made headlines since Trump became president-elect, even as his otherwise cool rhetoric and his controversial appointments threaten a backlash if he doesn't improve his approach to China.

“If the United States imposes high tariffs on Chinese imports, the smart thing for China to do is to retaliate. China is too big to accept such bullying,” David Dollar, a former U.S. Treasury Department financial ambassador to China, wrote recently in China File.