Tuesday, April 20

Why China has much more to lose in a trade war

With investors seemingly undecided about how badly trade tensions with China will hit U.S. markets, CNBC’s Jim Cramer wanted to define the issue a bit more for Wall Street.

“‘Who has more to lose?’ People keep asking this question about the trade war with China as though we don’t really already know the answer. But we do: the Chinese have more to lose,” the “Mad Money” host said Tuesday.

How did Cramer come to that conclusion? For him, the answer was simple: while the U.S. economy is mainly focused on consumer spending, the Chinese economy is centered around manufacturing.

“We buy lots of stuff from China, but with these new tariffs, it’s easy enough for our companies to start making the same merchandise in other countries,” he said. “Heck, Vietnam, Cambodia, Thailand, even Mexico are already less expensive places to do your manufacturing than China, even without the tariffs.”

Therefore, if U.S. companies stopped building factories in China, it could mean economic pain for the People’s Republic, he continued.

For more of CNBC’s coverage of the U.S.-China trade spat, click here.

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