U.S. President Donald Trump recently accused the Chinese government of covering up the COVID-19 outbreak. He released an 'intel' that suggested Beijing allowed the virus to spread. 

His accusations worsened the relationship between the two economic powerhouses. Chinese officials condemned the Trump administration's claims, saying it is 'willful ignorance' and dangerous mismanagement. 

Experts believe the frosty relationship between both countries is a 'dangerous dynamic.' The Cold War, they say, could lead to a prolonged pandemic and throw the world into a deeper economic crisis. It could cause problems to trade talks and open new geopolitical rifts. 

The Worst in Five Decades

The U.S.-China relations are at the worst they've been in five decades. The worsening ties could affect a much-touted trade deal that calls on Beijing to buy more American products. 

The 94-page agreement detailed purchases the Chinese government planned to make. It included $77 billion worth of American manufactured goods-including cars, airplanes, and medical equipment. They will also buy agricultural products worth $32 billion and liquefied natural gas and crude oil for $52.4 billion. 

It is unclear whether or not China will follow through with the signed agreement. Experts believe the pledge was going to be hard to fulfill following shrinking economies brought about by the pandemic. Chinese President Xi Jinping may choose to renegotiate the deal instead. 

Steve Mnuchin, Trump's treasury secretary, expects Xi to uphold the agreement. Failing to do so could have significant consequences as to how other nations would do business with them, he claims. 

Reparations

Despite Mnuchin's hopes to preserve the deal, President Trump revealed he is considering the idea of imposing new tariffs on Chinese products. He also floated the idea of extracting reparations for the effect the coronavirus pandemic has on the economy and the American citizens. 

According to the U.S. president, they have yet to determine the final amount of possible reparations, but declared it is 'very substantial.'

The Chinese government responded to the 'threat'. They claim some political figures are using the COVID-19 pandemic to stigmatize China. They said the reparations were preposterous and were part of a political farce.

Possible Outcome

China, on the other hand, has reportedly finalized plans to establish an air defense identification zone in the South China Sea. The move will likely create further complications and create a conflict with the United States who move navy ships through the area.

Shi Yinjong, an international relations professor, said both countries are in a new Cold War. The relationship, he claims, is very different from that of a few months ago. 

Should a Cold War ensue, the Pentagon's budget will take a big hit. The U.S. government spent large amounts of money on keeping the nation's economy alive in the midst of the COVID-19 pandemic. The decision likely added several trillion dollars to the year's deficit. The spiraling deficiencies could heavily affect the U.S. Defense Department.

Experts are concerned whether the U.S. military can stop a Chinese assault on Taiwan and defend the nation in the Western Pacific while still maintaining all commitments with the rest of the world. 

The Pentagon may start reducing commitments to keep China in check. It could also choose high-risk strategies like nuclear escalation, or only bluff and hope the adversary won't test the country's limited capabilities. 

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