Could we sanction China if we had to?

As Taiwan tensions mount, the question becomes less hypothetical.

Nancy Pelosi’s visit to Taiwan is highly unlikely to trigger World War 3. But China’s ferocious reaction signals that U.S.-China relations are the worst they’ve been in decades. Some people instinctively blame the U.S. for the deterioration, but this is wrong — China is a revisionist power, flush with the new strength that decades of rapid economic growth have given it, and led by an ambitious and grasping man who has centralized power in his own person. Xi Jinping and his clique are determined that China should take its place in the sun, and this means disrupting a world order that was created before China was strong. Disruption creates conflict. The U.S., as a status quo power, has zero interest in picking a fight with China.

But a fight may come anyway. In the weeks, months, or years to come, China’s actions toward Taiwan are likely to become increasingly bellicose. Most of the discussion about a China-Taiwan conflict focuses on the possibility of a full-on invasion, which would require an amphibious landing. But amphibious invasions are very hard, and they’re pretty easy to see coming; most analysts think China’s military is not likely to have the capability to do this for a number of years. Instead, China is likely to start with some more limited action. This could include:

• Seizing the island of Kinmen or other small islands near to the mainland that are still controlled by Taiwan

• A naval blockade of Taiwan, perhaps foreshadowed by the recently announced naval exercises in the area

• Isolated missile strikes on military targets in Taiwan

China could also furnish arms and other goods to Russia to support its war effort in Ukraine, as a way of striking back at the U.S. for supporting Taiwan.

If China takes steps like these that are short of full-scale war, there’s essentially no chance that the U.S. will launch a full-scale attack on China as a response. But as with Russia’s seizure of Crimea in 2014, there will be enormous pressure on the U.S. government to do something. So that something will likely be sanctions.

Sanctions used to be a bit of a joke, but no longer. The financial sanctions that the U.S. and Europe have leveled against Russia since the invasion of Ukraine have been absolutely devastating. A new paper by Sonnenfeld et al. shows just how devastating, leveraging independent data sources to paint a grim picture of just about every aspect of the Russian economy.

So the question then becomes: If we had to, could we level similar sanctions against China? The likely answer is that yes, we could, but the effect would be somewhat less devastating, and the costs would be much higher.

To understand why, let’s talk about the two main types of sanctions we might use: financial sanctions and export controls.

Financial sanctions