Exclusive: New Study Says U.S. Can’t Win the Trade War and Neither Can China

The escalating U.S.-China trade war is unwinnable by either side, according to new research shown exclusively to TIME.

On Sept. 1, the Trump Administration slapped 15% levies on an additional $125 billion of Chinese imports, prompting Beijing to retaliate with 5-10% tariffs on 1,717 American products, including soybeans, crude oil and car parts. The average U.S. tax on Chinese imports now stands at 21.2%, up from just 3.1% when President Donald Trump took office.

The bruising trade tussle has roiled bourses and upset supply chains for over a year, hastening fears of a global recession. Nevertheless, there is no sign of a resolution in sight, with Trump tweeting on Aug. 23, “We don’t need China and, frankly, would be far better off without them.”

Economists at the China Europe International Business School (CEIBS) and Open University of Hong Kong disagree. A new number-crunching analysis says only China has the manufacturing capacity to satisfy the U.S.’s huge appetite for products, meaning American consumers must continue to buy from China or U.S. retailers will suffer.

Conversely, American demand far outstrips the rest of the world combined, meaning China cannot replace its American customers with those elsewhere for the foreseeable future—or at all.

“Replacing the [U.S.-China trade] relationship with any other country is impossible in the short to medium term and possibly in the long term also,” says Professor Bala Ramasamy, associate dean at CEIBS. “It is the relationship between a very large and insatiable market and a very well-oiled production machine.”

Take cellphones, for example, which alone accounted for 13% of total imports from China to the U.S. last year, worth some $70 billion. If all the cellphones the U.S. exports—some $10 billion’s worth—were kept for domestic consumption and combined with all those produced by second-place exporter Vietnam—around $30 billion’s worth—it still wouldn’t be enough to satisfy the U.S. market.

By the same token, Beijing would require the Netherlands, the U.K., Germany, India, Sweden and France to source all their cellphones from China just to replace the value of American imports. It’s a picture repeated for a myriad of other consumer products.

“Our research findings may offer a basis on which to cool recently increasing tensions and rhetoric,” says Ramasamy.