As questions swirled Tuesday about who would come out on top if a trade war sparks between the United States and China, CNBC’s Jim Cramer weighed each side’s advantages.

For one, the United States imports much more from China than China imports from the United States, meaning that Trump’s tariffs on Chinese goods would more drastically affect producers there, the “Mad Money” host said.

But he noted that some U.S. retailers import industrial parts, machinery and electronics from China, which could put pressure on them as they seek other countries from which to source their products.

There’s also the question of boycotts: Chinese officials could pressure consumers to steer clear of U.S. businesses that operate in China, like Starbucks and Yum China, Cramer warned.

Still, he maintained his Tuesday morning call that, even with the president’s most recent threat to place $200 billion worth of tariffs on Chinese goods, “China needs us more than we need them.”

“The one wild card? Will the Chinese risk boycotting Apple when it’s one of the largest employers in China?” he said. “That’s the trillion-dollar question, as in Apple’s run at the trillion-dollar market cap hang[s] in the balance here.”

“What’s bad for Apple is bad for the PRC,” he added.

With Apple’s business off the table, it would become clear that China relies more heavily on the United States than the other way around, Cramer argued.

“I think President Trump is willing to take the pain if it means getting China to abandon its most harmful and predatory trade practices,” he said. “Our economy’s strong enough that he’ll let Boeing and Caterpillar and United Technologies get hurt; same goes for Procter & Gamble and Kimberly-Clark or the beverage companies or Yum China. In the long run, President Trump clearly believes it’ll be worth it.”

The “Mad Money” host also flagged one of the United States’ biggest advantages: its size.

As a global economic leader, if the U.S. scaled back exports to a communist dictatorship like the People’s Republic, it could seriously weigh on Chinese markets, he said.

“China attempted to create a coherent, Western-style stock market not long ago, but it broke down badly last night, with more than 1,000 stocks falling over 10 percent,” he continued. “The Chinese government is going to have to prop them all up — they’ve done that before — but that’s a multi-trillion-dollar undertaking.”

So if you’re still toying with the question of whether the United States or China is the real paper tiger here, Cramer has your answer.

“I think we may find out that China’s the paper tiger,” he said. “If you think the sell-off in our stock market was bad, just look at the collapse in their stock market. It’s possible this could go on for a long time and get very painful, but I wouldn’t be surprised if China ends up folding much faster than anyone expects.”

Source: Tech CNBC
Cramer points to the trillion-dollar question about US-China trade: What about Apple?