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You see, the Chinese have so much more to lose than we do, mathematically. They export five times more to us than we do to them. They will be hurt badly if the President introduces the next round. And I can see another Shanghai crash right around the corner if they don't bend.
It is the Chinese who are playing with fire, not us. Even if you think the President is wrong to ratchet things up further, and he will, the Communists mistakenly created a stock market. It was a big mistake. It really was. Encouraged tens, in fact, millions of people to invest their life savings in it. And now they have to spend money that they do not have, to keep it propped up or else. Bank collapses, massive unemployment, revolution. Who knows how bad it can get over there?
How about us? Remember, we are not an export power. How small? We're the 155th largest exporter as a percentage of the GDP. That's 155th on earth. I didn't know that many countries existed. Those stats, not whether I want to make America great again, and by the way we are always and have been great, are not what I think is at stake here. They are the reason why our stock market hasn't been crushed by the tariffs. Even as it's gone down, numerous times now, since the President first announced that 2018 was the year to get tough on trade.
Now I don't want to be too glib about this, however, I believe this market, our market, not theirs, can bear the pain these tariffs cause and yet still go higher after each bruising provided ... and there is a proviso ... that we don't simply decide to shut all of our borders to all of our trading partners, with tariffs that shut world trade. We will deal with that if it occurs, but I do not believe we will end up there.

In spite of the market's reaction, a new round of tariffs is not the end of the world, according to Action Alerts PLUS chairman Jim Cramer.

The Dow Jones Industrial Average was down triple digits Wednesday, July 11, breaking a week's worth of momentum, following the White House's announcement of $200 billion in duties on Chinese imports.

While a trade war isn't good for either party, the market is overreacting to the news, according to Cramer.

"It is the Chinese who are playing with fire, not us. Even if you think the president is wrong to ratchet things up further," Cramer told the audience during his monthly Action Alerts PLUS members call.

One of the reasons for Cramer's optimism is the fact that the U.S. is actually not an exporting powerhouse. He pointed out that the U.S. is the 155th largest exporter as a percentage of gross domestic product.

Meanwhile, exports accounted for about 18.54% of GDP in 2017, according to Statista. While this is nearly half the 35% level it had in 2007, it is still well ahead of the U.S. reliance on exporting products.

"This won't last forever and the U.S. has the upper hand. So I am willing to take the risk that earnings are not going to be hurt," Cramer said. "Those stats and not whether I want to make America Great again -- and by the way, we have always been great -- are what is at stake here."

For critics of the tariffs, the stats that are really at stake are American jobs. But Cramer looks to history for guidance on the pain that employees may see stateside as a result of these tariffs.

"When the U.S. slapped that 30% tariff on steel -- 5% higher than the current one -- back in 2001, the International Trade Commission said that it only cost our country about 13,000 jobs," Cramer said. Yep, a 30% tariff didn't hurt a much weaker economy than we have now where more than 500,000 jobs were created in the last year in manufacturing and construction."

Do you want more exclusive investing insight from Jim Cramer? Get 24/7 access to Jim's charitable-trust portfolio with a free trial to Action Alerts PLUS! You can also watch all of Jim Cramer's New York Stock Exchange live shows on YouTube.