MARY LOUISE KELLY, HOST:
Here are a few numbers to keep in mind when considering the trade fight with China. The size of the U.S. economy is roughly $19 trillion. The size of China's economy - roughly $13 trillion. That's when you measure by GDP - gross domestic product. But China is growing faster. It is expected to overtake the U.S. as the world's largest economy sometime in the next decade or so.
AUDIE CORNISH, HOST:
Here are two more numbers to consider as fears mount of a full-scale trade war. Last year, China exported more than $500 billion in goods to the U.S. That's more than triple what the U.S. sent to China. In a moment, we'll hear more about the leverage each side has. First, NPR's Scott Horsley has the latest on the tough talk on trade from Washington and Beijing.
SCOTT HORSLEY, BYLINE: President Trump ratcheted up the trade conflict last night when he floated the idea of slapping tariffs on another $100 billion worth of Chinese exports. China pushed back, insisting it's not afraid of a trade war and vowing to defend its interests at any cost. The war of words triggered another sell-off on Wall Street today. The Dow Jones Industrial Average tumbled 572 points. And all the major indices lost more than 2 percent. On WABC Radio this morning, Trump shrugged off the losses, saying it's worth it if that's what it takes to change China's behavior.
(SOUNDBITE OF RADIO SHOW, "BERNIE & SID IN THE MORNING")
PRESIDENT DONALD TRUMP: We may take a hit. And do you know what? Ultimately, we're going to be much stronger for it, but it's something we had to do.
HORSLEY: For all the big tariff numbers thrown around, most of the import levies threatened by the U.S. and China have not yet taken effect. And there's a possibility that negotiations over the next few months could head off a trade war. But Chad Bown, who is with the pro-trade Peterson Institute for International Economics, warns in this high-stakes game of chicken, there's also a danger that the two sides will miscalculate and stumble into a conflict neither actually wants.
CHAD BOWN: I do think we're at risk of one misstep putting us down a path that could be extraordinarily problematic for international trade.
HORSLEY: The president's new economic adviser, Larry Kudlow, has tried to be the voice of calm this week.
(SOUNDBITE OF ARCHIVED RECORDING)
LARRY KUDLOW: Hopefully, this will have a very happy ending. I'm still optimistic, by the way, that the Chinese recognize that the rest of the world is on our side.
HORSLEY: Indeed, much of the world agrees with the U.S. that China needs to reform the way it treats intellectual property and stop forcing firms from other countries to share their technology. But Bown says rather than building an international coalition to challenge China, President Trump has squandered goodwill, pulling out of a Pacific trade agreement, threatening to pull out of NAFTA and slapping tariffs of his own on close allies like Japan.
BOWN: I don't think trading partners are going to be particularly willing and eager to engage with him, even our allies, just because it's really unclear how it is that he's actually going to behave in any type of trade negotiation.
HORSLEY: While the White House is still just sharpening its economic sword, people who work with plow shares around the country are already feeling the pain. Farmers, many of whom supported Trump in the 2016 election, are already seeing lower prices for key exports like soybeans before the tariffs even take effect.
DAVID SWENSON: It's more than the tariffs. It's also the rhetoric. It's interfering with the functioning of the economies out here in the Midwest.
HORSLEY: Dave Swenson is a regional economist at Iowa State University. He notes crop prices were already depressed before this trade tussle. Net farm income last year was only about half what it was in 2013.
SWENSON: The ag sector is very, very tight. This makes a bad situation significantly worse.
HORSLEY: White House trade adviser Peter Navarro was defiant this week, insisting China has more to lose from a trade war than the United States does. Given the relative size of their export economies, that's likely true, but to observers like Chad Bown, it's not much comfort.
BOWN: Everybody loses from a trade war, so I don't think it's particularly useful to decide who it is that's going to bleed out faster.
HORSLEY: Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.