Since I wrote about the rising stakes in the trade war last week, things have heated up further. The United States has pledged tariffs on an additional $100 billion worth of Chinese goods, which means it is threatening tariffs on more than $150 billion in goods annually. China can’t strike back in kind—it doesn’t even import that much from the U.S. So it is looking for other ways to strike back.

China is certainly talking tough. “If the U.S. side takes its own course and insists on carrying out unilateralism and trade protectionism, the Chinese side will fight resolutely and take them on until the end,” a spokesman for China’s Commerce Ministry said today. This comes a week after the ministry pledged to “take [America] on until the end at any cost.”

But what kind of resolute fighting is China talking about? What could it do to hurt the U.S.? Quite a lot.

Dump U.S. Debt

According to estimates, America will borrow almost $1 trillion this year. China has already loaned America $1.2 trillion. The Chinese government could simply sell off its holdings of U.S. debt and refuse to buy any more.

This is what many refer to as China’s “nuclear option.” Dumping such a vast quantity of U.S. bonds would reduce the value of those bonds, making investors less willing to buy U.S. debt in general. The U.S. would then have to pay more to investors to entice them to loan their money. This would make it much more expensive for America to borrow money. If the overall rate of interest it pays on its debt rises only a few percentage points, America will be spending more on interest payments each year than on defense. Historically, this is the point when nations tip over to complete financial and national destruction.

Investment research firm sgh Macro Advisers reported that “China had already signaled an aggressive and potentially more ominous escalation in the developing trade wars to the White House.” It warned:

From what we understand, the Chinese government has halted its purchases of U.S. Treasuries. Despite the direct encouragement, according to Chinese sources, by U.S. Treasury Secretary Steve Mnuchin for China to “stay put,” Beijing has apparently discontinued purchases of U.S. Treasuries “for the past few weeks.”

That’s not quite the nuclear option. Halting purchases of treasuries isn’t the same as selling the ones you’ve got. But it’s more than a warning shot. Losing its main customer for U.S. debt will inflict real harm on the debt-addicted nation.

Other ‘Nuclear Options’

But China has other nuclear-caliber methods of striking the U.S. economy. One would be to print more yuan. This would devalue the Chinese currency, causing some negative repercussions at home, but it would also make everything priced in yuan cheaper to buy. This would create a hidden subsidy for Chinese goods and a hidden tax on American ones. “China is evaluating the potential impact of a gradual yuan depreciation, people familiar with the matter said, as the country’s leaders weigh their options in a trade spat” (Bloomberg News, April 9).

“Don’t relax yet: A potential yuan devaluation is still very much on the table,” warned Bloomberg’s Shuli Ren.

Another potential “nuclear option” is that China could cut America’s supply of rare earth metals. You don’t hear much about them, but you are using these minerals right now. Metals like cerium, neodymium and gadolinium are used in small amounts in flat screens, electronic devices and basically any device that includes “smart” in its name, including smart phones and smart bombs. Rare earth metals are essential for commerce, industry and the military. And just about all of America’s rare earth imports come from China.

“Basically, if China really wanted to mess with America, it could just clamp down on these exports,” wrote the Week. “That would throw a massive wrench into America’s supply chain for high-tech consumer products, not to mention much of our military’s advanced weapons systems.” This article is ominously titled “How China Can Win a Trade War in 1 Move.”

China has other potential weapons—such as stopping all imports of U.S. shale oil. But at this point the most important question is, Would China really go nuclear in any of these ways?

Will They Do It?

Nuclear war is a big step—and a big risk. One reason these actions are considered “nuclear options” is that they would damage the Chinese economy as well, as would America’s retaliations. Economists even debate who would suffer more if China dumps its U.S. debt. Cutting off the American market from rare earth metals would hurt Americans, but it would cost the Chinese one of their biggest customers—and it would provoke the U.S. to begin producing products from its own rare earth deposits. China purchased and shut down many American mines, but in time the U.S. could find a way to mine them again.

If China could get Europe to join the attack, they could plunge America into economic Armageddon.

If China were to sell off U.S. Treasuries, it would damage the U.S. economy. But if China, Europe and Japan (the second-largest foreign holder of U.S. debt) sold off U.S. Treasuries, they could absolutely destroy the U.S. economy. Coordinating a strike with the Europeans to cut off America from rare earth metals and damage other American sectors at the same time would prove devastating.

China is already calling for Europe to join it. The head of China’s mission to the European Union, Zhang Ming, called on the bloc to take a “clear stance” against America, calling on the EU to join China to “jointly preserve the rules-based multilateral trade order.”

While the EU has some of the same problems with China that U.S. President Donald Trump articulates, it also has reason to side with China. Ferdinando Giugliano wrote for Bloomberg, April 10:

The EU’s main strategic interest in this fight is to ensure that the multilateral trading framework—including the World Trade Organization—survives. At the moment, this concern is most shared by Beijing, not Washington.

Trump has also (rightly) singled out Germany for unfair trade practices. Germany could decide to stand with China, rather than risk America winning the struggle against China and then targeting Berlin as its next score to settle.

The Asia Timesdescribed today how China sees this trade spat as an opportunity. “Despite Trump’s confrontational approach to China, the fact that he has alienated America’s allies might be the greatest gift he could have given to Beijing,” it wrote. China, it argued, feared the U.S. and the EU ganging up on it. But now it thinks it can get Europe on its side.

Philipp Liesenhoff noted at Handlesblatt that “China had been trying to win over Europe for its vision of a non-U.S.-led world order.”

Former Italian ambassador Stefano Stefanini said that if America “declares an all-out war on the wto and the international free-trade system while China becomes its defender,” then “the EU will inevitably be pushed on to China’s side.”

China and the EU aren’t in lock-step yet. So it makes sense that China would hold off using its economic weapons of mass destruction until it has a clear ally in Europe and until the two can coordinate their economic strikes to inflict the most damage on America and the least damage to themselves. Massive debt dumping, yuan depreciation, a rare earths embargo: these are single-use weapons.

This coordinated strike is exactly what the Bible warns of. As I wrote in my most recent Trumpet print article, Isaiah 23:3 forecasts a “mart of nations.” Chapter 23 is full of references to ships, oceans and overseas trade. It describes a trade alliance that includes Tyre, an ancient economic power, and a type of the economic power rising in Europe. It also includes China, using its ancient name Chittim. Japan is also part of this group. (Request Isaiah’s End-Time Vision, by Gerald Flurry, for biblical proof.)

The Bible prophesies that Europe and China will work together on trade. Other prophecies describe a group of nations that will wage devastating economic warfare against the nations descended from ancient Israel, the most prominent of which is the United States.

This attack has already begun, although in a limited way. Much worse is coming.

Trumpet writer Robert Morley outlined in 2013 an all-too-plausible example of how a combined Chinese and European economic attack could play out. This kind of attack is even more plausible today. Read his article “The Day the Dollar Dies” for a gripping account of what is at stake in this trade war. And if you want to learn more about the coming trade war and who will win it, please read my article “Spiraling Into Trade War.”