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A cold war with China is possible: Chuck Hagel

Rachel O'Neill

On Sunday, a new round of U.S. tariffs against China is due to go into effect, but former Secretary of Defense under President Obama, Chuck Hagel, said this trade war could be signaling something more devastating than raised import taxes.

Is it possible we could be headed for a new Cold War between two superpowers? 

"I think we very well could be," Hagel told Gerry Baker on “WSJ at Large” Friday. "China is a great power. We don’t want to get into a Cold War with China or Russia ... it is very unsafe for a hair-triggered world that is going to put 2 billion more people on the face of the earth by 2045. China has to be dealt with smartly."

Baker questioned Hagel on whether President Trump's strong-arm approach to China is a winning move, or if tariffs are rebounding and hitting the American consumer as much as Beijing.

"I don’t know what history books he’s referring to, but that’s never the case," Hagel said. "There are severe consequences in a trade war for everyone."

"But are we just putting our hands up if we don’t take them on with tariffs?" Baker pressed.

"No, of course not," Hagel responded. "You have more than just one alternative ... But we’ve got a fundamental issue here that’s probably bigger than any of the issues, that we can’t do anything about, and that’s China is a communist authoritarian government. That’s a structural problem beyond our ability to negotiate."

Trade tensions escalated between the U.S. and China last week when Trump threatened to raise duties on $250-billion worth of Chinese goods from 25% up to 30%, and increase tariffs on another $300 billion in products from 10% to 15%. The president then urged American companies to leave the world's most populist country and move their operations back to the United States.

China seemingly softening their stance on retaliatory tariffs earlier this week when Gao Feng, a spokesman for China’s Ministry of Commerce, said China is willing to calmly resolve the trade dispute with the U.S. and is against any further escalation in tensions.

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Trade negotiations are set to continue in September with both sides convening face-to-face in Washington.

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