Speaking at an Epoch investor briefing in Sydney on Tuesday, Mr Priest said that the two largest economies in the world have nothing to gain by going head to head in a trade war.
The US-China trade war escalated on Tuesday after the United States announced it will impose a 10 per cent tariff on Chinese goods. The tariff will be imposed later this month on $200 billion worth of Chinese goods, which will increase to 25 per cent by the end of the year.
The new tariffs, together with the penalties from earlier this year, mean roughly half of all products sold by China to the US will be affected.
Epoch’s Bill Priest said that there were ways to deal with China but the current US strategy was not the way to do it.
“There are ways to deal with that without going into an open trade war because no one’s going to win this thing,” he said.
In a statement released by the White House, President Donald Trump said that China had had many opportunities to address the US’ concerns.
“Once again, I urge China’s leaders to take swift action to end their country’s unfair trade practices,” he said.
Mr Priest said that, to an extent, the West had enabled China’s trade practices but reiterated that the strategy was the issue with the current US challenge.
“I do think China stole some IP, we are in a position to challenge them right now, maybe five years from now we wouldn’t have the same leverage on them, but I think the way we are going about it is not good,” Mr Priest said.
President Trump said in the statement that tariffs would increase to 25 per cent by the end of the year but warned any action by China would result in further tariffs.
“If China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports,” he said.
Wall Street has already reacted to the news of new tariffs with consumer and technology stocks taking the biggest hit.
The Nasdaq index dropped by 1.4 per cent while the S&P 500 fell by 0.6 per cent.
The Dow Jones index was down 92 points to 26,062 and the Aussie market reacted modestly by opening -0.1 per cent lower than the day prior.
The announcement had a flow-on effect for the Aussie dollar, which fell by 0.4 per cent to US 71.57 cents shortly after the announcement.
