China gut punches Trump on trade. Is it time to get worried?

The United States and China are not in an all-out trade war yet, but they’re getting closer to it. That’s why the stock market tumbled Wednesday morning and soybean farmers are panicking.

On a grand scale, the latest development is unlikely to send the U.S. economy into a recession. Growth is strong and so far China has only threatened $50 billion tariffs on U.S. goods. The tariffs haven’t taken effect yet, but even if they do, they are minuscule in relation to America’s $18 trillion economy — 0.3 percent to be exact.

But that doesn’t mean there won’t be pain.

Certain parts of America — especially Washington, Illinois, Iowa, Minnesota, Indiana and Kansas — will feel it acutely. And more Americans will get hurt the further the brinkmanship goes, especially if the stock market sell-off ends one of the longest bull markets in U.S. history.

Here’s a quick recap of what happened in the last 24 hours: On Tuesday evening, the U.S. announced its intent to put 25 percent tariffs on 1,300 Chinese imports. The tariffs won’t take effect until late May at the earliest, but the message to China was clear: Trump wants China to buy more U.S. stuff and do a better job protecting U.S. intellectual property.

China, normally known for “measured” responses in its trade dealings, fired back Wednesday with a gut punch to Trump, saying it intends to put 25 percent tariffs on the top goods America exports to China: Airplanes, soybeans and cars. America’s tariff list was full of a lot of products, mostly parts of machines, that are traded on a smaller scale. But China is taking aim at key U.S. industries, and two of them — soybeans and cars — are concentrated in states Trump won.

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Trump is making a big gamble here. Trump’s move, whatever reaction it draws, is aimed at a more favorable long-term reaction from China. But how much is he willing to sacrifice? And how long is he willing to go?

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“If protecting U.S. intellectual property is the ultimate goal here, I’m not sure how destroying shareholder wealth, damaging CEO confidence and making the American farmer the main sacrificial lamb here after six years of pain on the farm is going to get us there,” said Peter Boockvar, chief investment officer of the Bleakley Advisory Group.

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