TRUMP: The US is 'not in a trade war with China' because a trade war was already 'lost many years ago'

Reuters/Carlos Barria

President Donald Trump welcomes Chinese President Xi Jinping at Mar-a-Lago state in Palm Beach, Florida.

• President Donald Trump said the US is "not in a trade war with China" because it was already lost by previous leaders.
• The tweet comes after the US and China announced tit-fot-tat tariffs on a slew of goods.
• Economists say the back-and-forth does not amount to a full-blown trade war yet, but the risks are rising.

President Donald Trump responded to the escalating trade fight between the US and China on Wednesday, saying that the trade war between the two countries was already over.

"We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.," Trump tweeted. "Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!"

The tweet comes after the US and China both announced tit-for-tat tariffs on products from one another.

The US kicked off this round of the fight Tuesday when the US Trade Representative announced tariffs on 128 Chinese goods, particularly in emerging technology, transportation, and machinery. The tariffs specifically targeted industries that fell under the Chinese government's Made in China 2025 plan identified as areas of growth for the country.

The total value of the Chinese goods subject to the tariffs was $50 billion.

As Trump referenced, the US tariffs came after an investigation into the theft of US intellectual property by China. The USTR determined that the Chinese government was forcing US firms to share their IP with Chinese companies in order to do business in the country, depriving those companies of sales and hurting the US economy.

A few hours later, China responded in kind with tariffs of their own targeting soybeans, automobiles, and chemicals. Soybeans are of particular importance since they are the largest US agricultural export to China, with just over $14 billion worth heading to China in 2016.

Trump has consistently attacked China for the large trade deficit between the two nations, which totaled $375.2 billion in 2017 and requested the Chinese government find a way to shrink the gap by $100 billion.

According to economists, shrinking the trade gap between the two countries will prove difficult, and in doing so Trump may risk a trade war between the two countries. According to Adam Slater, lead economist at Oxford Economics, the current spat between the US and China is not yet a full-on trade war but the danger is certainly present.

"While the near-term impact on the global economy of recent moves by both sides may be quite small, the risks of escalation are clear, with the seeds of more serious trade conflict apparent," Slater wrote in a note to clients. "Possible warnings signs of a trade 'skirmish' escalating into trade war would be were US tariffs being extended to Chinese industries such as consumer electronics and negative developments in the negotiations on the North American Free Trade Agreement (NAFTA) and in the US-EU trade relationship."