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Business owners, particularly those who depend on trade with China, likely weren’t enjoying a completely carefree July 4th this year.

The planned U.S. tariffs on $34 billion worth of Chinese imports took effect Friday, pushing the cost up 25% for impacted products. China’s customs agency responded immediately, with equivalent tariffs on American products.

A few more shoes could drop. U.S. tariffs on another $16 billion worth of Chinese goods are already being reviewed, and President Donald Trump has threatened to increase that number to as much as $450 billion–that’s 90% of all U.S. imports from China last year.

China is not budging, either. Speaking at a weekly news conference, Commerce Ministry spokesman Gao Feng told reporters in Beijing Thursday that “China will not bow down in the face of threats and blackmail and will not falter from its determination to defend free trade and the multilateral system.”

But here is an issue: China can’t go toe-to-toe with the U.S. in expanding its tariff range because of the trade imbalance. The U.S. bought $504 billion in goods from China in 2017, while China only imported $130 billion in American goods. Matching the U.S. in tariffs would disrupt China’s economy too much.

If the situation does indeed escalate, China probably has to find ways outside of tariffs for retaliation, but there isn’t a shortage of possibilities.

To start with, China could manipulate the value of its currency to keep Chinese goods cheap abroad and therefore mitigate the added cost from U.S. tariffs. But that’s a option to be used with caution, since a devaluing currency will also mean an outflow of capital, and destabilization of the financial market, as well as less buying power for the country’s importers and overseas travelers.

In addition, Chinese officials have said Beijing won’t use yuan devaluation as a way to hit back at the U.S. tariffs. The currency has already been declining relative to the dollar for a few months, and recently hit its lowest level since last August. To calm jittery investors, China’s central bank chief has pledged on Tuesday to keep the exchange rate “basically stable” and yuan has since surged against the U.S. dollar.

If weaponizing its currency is not a feasible option, China could simply make operations of U.S. companies in China more difficult. And the country is not a novice in doing so, says Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

“They don’t even need to roll out any new policy, they can simply achieve the goal through bureaucracy,” Ma tells Barron’s. “For example, [extending] pending approval for permits and licenses, or favorable treatment toward domestic companies over foreign competitors.”

One good example is Qualcomm’s (ticker: QCOM) planned $44 billion acquisition of Dutch chip maker NXP Semiconductors (NXPI). Since the post-combo company’s sales in China will surpass a certain threshold, the deal requires approval by the Anti-Monopoly Bureau of the Ministry of Commerce in China. The deal was announced in October 2016 and has since been approved by eight out of nine required global regulators. China is the last one.

Shares of NXP surged 9% from May 18 through 30 as the U.S.-China trade spat cooled down and hopes were up that Beijing’s okay might come through soon. The stock, however, stumbled 5% before the market opened on May 30, after the trade war threat was ignited again; NXP ended the day with a loss of less than 1%, suggesting investors have a measure of confidence the deal will go through.

Earlier this week, China banned chips from Micron Technology (MU), of Boise, Idaho, citing a preliminary injunction in patent-infringement cases filed by United Microelectronics Corporation of Taiwan and a Chinese partner. “Anyone who for a minute believes that this was a true and fair verdict in which Micron infringed upon UMC’s IP and not part of the escalating trade war between China and the U.S., also believes in Santa Claus and the Easter Bunny,” wrote Semiconductor Advisors LLC in a report.

The service industry is another vulnerable spot for the U.S., says Beth Ann Bovino, an economist at S&P Global. Although the U.S. has a significant deficit to China in goods, it does enjoy a large surplus in the service sector.

In 2016, the U.S. had a $38 billion service-trade surplus with China and almost 70% of that came from the travel industry. During tensions with South Korea over Seoul’s deployment of a U.S.-backed anti-missile system, China simply banned sending group tours to Korea, biting a large chunk off the country’s revenue from the tourism industry. If China made that same move against the U.S., American hotel and entertainment industries could get hurt, not to mention retailers that cater to upscale Chinese tourists.

Bovino is also concerned that nationalist sentiment could perk up and Chinese consumers might shun American products voluntarily. During a territorial dispute with Japan in 2012, sales of Japanese cars in China nosedived as anti-Japanese sentiment fueled a boycott of that country’s goods. Now, there are already posts to boycott U.S. goods on Chinese social-media platforms.

Of course, the U.S. has other things on its agenda apart from direct trade. The White House said it would broaden the restrictions on Chinese firms investing in the U.S. high-tech industry.

The key to the technology industry is that once standards are established, they could hold for a generation or two, and the companies controlling them can benefit for a long time. With its market size and affluence, China could dominate the space--in the present and the future--if it has access to developing technologies. That’s why President Trump has been very keen on protecting the U.S. high-tech industry.

Since last year, at least eight acquisition or investment efforts from Chinese companies have been blocked by the Committee on Foreign Investment in the United States (CFIUS) on the basis of threats to national security. Deals blocked include the foiled high-profile takeover of remittance company MoneyGram International (MGI) by Ant Financial, a unit of Chinese Internet giant Alibaba Group Holding (BABA).

In recent years, acquisitions by Chinese-owned companies make up the largest percentage of transactions reviewed by CFIUS, surpassing the U.K. and Canada from previous years. The number has increased substantially, from 10 transactions in 2011 to 67 in 2016, according to a report released by the U.S. Government Accountability Office in February.

On the one hand, Chinese investments in the U.S. have been on the rise. On the other hand, “The U.S. has tightened the screws a lot more than ever before,” says BMO’s Ma.

In a full-blown trade war, Ma thinks China has more at stake in the short term due to its heavy reliance on U.S. technologies. But in the long run, the barriers might actually give the country added incentive to develop its own technology on an accelerated schedule. “China obviously wants to do it; [economic disputes] will only add additional energy to that push,” says Ma.

Corrections & Amplifications

An earlier version of this article mistakenly reported that almost 70% of the U.S.’ $38 billion service-trade surplus with China in 2016 came from air travel. That number applies to entire travel sector.

This story has been updated to reflect new developments.