Trade War With China Is Coming, Eurasia Group Predicts

Eurasia Group founder and president Ian Bremmer has warned that he believes the U.S. is headed for a trade war with China this year after Donald Trump assumed the presidency for the second time, Jennifer Schonberger reported for Yahoo Finance.

The situation with China, though, is different than with places like Mexico, Canada, and Europe if new tariffs are imposed because it will retaliate.

"Like two boxers touching gloves before a match, there's a fight that's coming," Bremmer told Yahoo Finance during an interview conducted at the World Economic Forum (WEF) in Davos, Switzerland.

"Everyone around Trump, with the exception of Elon Musk, is leaning into 'we want to hit China — we want to decouple our economy from theirs,'" Bremmer added.

Bremmer believes the situation with China, though, is different than with places like Mexico, Canada, and Europe if new tariffs are, in fact, imposed. Those places will trade punches in the early days but ultimately reach a deal, he said.

China, on the other hand, is not at a place where officials are willing to capitulate to any new Trump demands due to current economic challenges, forcing them to retaliate.

China’s economy grew at 5% last year, meeting the government’s target, but the country is propping up a lackluster property sector and is highly dependent on exports. Therefore, "what I expect is we're heading towards a trade war with China this year," Bremmer said.