What would a war with China mean for the economy?

would come with terrible consequences. After the loss of life, the economic effects would be a preeminent concern.

A 10% decline in GDP would entail a $2.5 trillion subtraction to annual economic output. Mass layoffs would result. Consumption, which accounts for 70% of U.S. output, would take a nosedive. The government would respond with massive economic stimulus. The federal deficit, already at 100% of GDP, would expand rapidly. At a minimum, the debt burden on future generations would become even more intolerable. Economic trade among the U.S., China, and Taiwan exceeds $700 billion annually.

Taiwan produces 92% of the world’s most advanced chips as well as up to 50% of commodity chips. As the Rhodium Group,"By some estimates, Taiwan’s leading chip foundry TSMC produces 35% of the world’s automotive microcontrollers and 70% of the world’s smartphone chipsets. It also dominates in the production of chips for high-end graphics processing units in PCs and servers.

Companies as diverse as Caterpillar, GM, Ford, and Starbucks would be severely affected. Each company derives more than 25% of its revenues from China. Chip companies with the most to lose from a war with ChinaQualcomm, Broadcom, and Texas Instruments. The U.S. also relies on China for clothes, shoes, electronics, furniture, and other essentials of daily life, and consumer giants such as Nike and Procter and Gamble source from China.

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