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China and the United States are heading for a trade war. At least, that's the apparent consensus among investors. But how will that play out in the markets? 

In this story, I'll give some ideas as to how to position a portfolio if the rhetoric about getting tough on trade finally translates into outright hostility.

China currently looks a lot like Japan did in the 1980s in terms of its relationship on exports and imports with the United States. Trade frictions then resulted in Ronald Reagan's administration imposing first a 45% duty on Japanese motorbikes, to protect Harley-Davidson (HOG) - Get Report , then a 100% duty on Japanese computers, televisions and power tools.

China has not got off to a good start under the administration of Donald J. Trump. Despite word that Trump will host Xi at his Mar-a-Largo resort on April 6 and 7, relations appear frosty between the two leaders. Trump didn't call Xi until three weeks into his presidency as he worked out his stance on Taiwan, finally acceding to China's "One China" policy. Tellingly, there's no golf on the scorecard at the April "working session."

That's in stark contrast to the chummy summit in mid-February when Trump met Japanese Prime Minister Shinzo Abe, an apparent "fast friend" and the first world leader to congratulate Trump in person after his election. I outlined a roster of Japanese stocks that could get a boost from tighter ties between the United States and Japan, a key economic and political ally to counter China's rising influence in Asia.

There's plenty of pessimism on China. Only 9% of European investors and 21% of Asian respondents say they believe the Middle Kingdom and the United States will resolve their disputes over trade and tariffs by dialogue, compromise and negotiation if the United States adopts a protectionist stance. Those figures come from a survey of investors by Nomura(NMR) - Get Report .

A significant majority (70% of the Europeans; 52% of the Asians) anticipate targeted retaliation against U.S. imports into China of goods like Apple(AAPL) - Get Report iPhones, cars and Boeing(BA) - Get Report planes in case of a trade war. That, or a ramp-up of anti-monopoly laws that conveniently ensnares American companies.

The comparison with 1980s Japan is a natural one. At 21% of total imports, China is the largest source of goods into the United States -- a similar amount to Japan in its heyday. It also has a trade surplus of about 7% of U.S. exports, again similar to the 1980s and Japan. China exports plenty of manufactured goods and industrial products, again as Japan did, and Chinese companies have done very little to invest across the Pacific -- just like NEC, Toshiba (TOSYY) and Hitachi (HTHIY) back in the day.

But China's situation is also quite different from that of Japan in the 1980s. China's exports come from multinationals, as part of their supply chain, whereas the exporters out of Japan in the 1980s were all purely Japanese. China is also more open to U.S. companies now than Japan was at the time, with companies like General Electric(GE) - Get Report , Procter & Gamble(PG) - Get Report , Starbucks(SBUX) - Get Report and Nike(NKE) - Get Report in the top spot in terms of market share in their industries, easing some of the hostility on trade.

The multinationals are unlikely to uproot out of China. The labor supply here, domestic Chinese demand and the clustering of related industries in China, such as in electronics-parts supply, are also attractions that encourage foreign companies to remain in the mainland. The chance of China-based exporters relocating to the United States, as Japanese car companies did in the 1980s, is considerably lower. Windshield maker Fuyao Glass HK:3606 and yarn producer Ke'er Textile, which is privately held, are notable exceptions. 

More than half of the largest exporters out of China are actually Taiwanese companies. They are led by Quanta Computer (QUCCF) , iPhone-parts supplier Foxconn -- technically called Hon Hai Precision Industry (HNHPF)  -- and computer and telecom parts supplier Pegatron TW:4938.

With the above often having numerous export-driven subsidiaries, Taiwanese companies make up 14 of the top 25 shippers of goods out of China to the United States, or 56%. Mainland companies make up only 16% -- the same share and number of companies (four) as those from the United States. Rounding out the list, two of the top 25 are from South Korea, and one is from Hong Kong.

Dell(DELL) - Get Report , Flex(FLEX) - Get Report , Jabil Circuit(JBL) - Get Report and Micron Technology(MU) - Get Report are the U.S. companies that make the list. The Korean companies are LG(LPL) - Get Report and Samsung Electronics (SSNLF) , while the Hong Kong representative is the power-tools and electronics maker Techtronic Industries HK:0669.

From China itself, the only top-ranking exporters are Alibaba(BABA) - Get Report , via its subsidiaries Shenzhen One Touch and Zhejiang One Touch, as well as the unlisted SeALL, and ZTE (ZTCOY) .

While Honda Motor(HMC) - Get Report , Toyota Motor(TM) - Get Report and Nissan Motor T:7201 all opened factories in the United States in the early 1980s to get around U.S. tariffs, that's unlikely to be the result of any trade pressure now. That's because Foxconn and Flex, for instance, are engaged in low-margin, labor-intensive industries. They'll lose their competitive edge by relocating.

A more likely response from trade pressure on China, if you ask me, would be for those companies simply to shift production to other countries with even lower labor costs, such as neighboring Vietnam, or other Southeast Asian nations. Wages in China are already high enough that they're causing problems for parts suppliers and other companies low down on the value-add chain. Extra trade hurdles could be the tipping point.

Whatever happens, the upshot won't be an increase in U.S. jobs or a bolstering of U.S. industry. Low-cost production has left the United States, and it's better off without it. The truth is painful for workers in North Carolina textile factories or Pittsburgh steel plants. But there have been some pretty big letters on the wall for quite some time, and they'd do best to read that writing.

The best option for the U.S. government is to offer re-training for blue-collar workers left out of jobs. It's not the imposition of trade tariffs that would drive up the cost of cheap Chinese imports -- the kind of stuff out-of-work blue-collar stiffs are going to buy.

What's more, U.S. companies are making very good money out of China, which certainly wasn't the case in 1980s Japan. The face of globalization has changed from simply making the most of cheap factory workers to selling those factory workers (and their families, and their bosses) goods and services.

"GE is a local global company," CEO Jeffrey Immelt said in a recent Bloomberg interview. "Earlier in my career, the question was 'How can we make the cheapest fridge?' Now it is 'How do we penetrate the different markets?' The Chinese understand this. Trump is smart, and he will see this, too." 

It's the U.S. companies in this story that would likely lose out the most in the case of a trade war initiated by Trump with China. China expects economic growth of 6.5% this year. In the worst-case scenario, Nomura estimates that would drop to 6.2%. That pace would still rank second only to India among major economies.

So how tough will the Trump administration actually get? New Secretary of Commerce Wilbur Ross is pledging "tougher enforcement" of existing trade rules across the board -- not specifically aimed at China. But he has said China is the 'most protectionist" major nation.

His counterpart, new Treasury Secretary Steve Mnuchin, appears unlikely to slap China with the "currency manipulator" tag, something the Chinese are desperately keen to avoid. Mnuchin says he'll stick with his department's verdict, which has so far been that China only meets one of three criteria for being a bona fide manipulator.

As with many aspects of the Trump administration, no one -- perhaps not even Trump himself -- knows what's going to happen. One thing's for sure: a true barrage of trade tariffs probably does no one on either side of the Pacific any good.

At the time of publication, Alex McMillan had no positions in the stocks mentioned.