The US has initiated an investigation into China's theft of US intellectual property (IP) using Section 301 of the Trade Act of 1974.

What that boils down to is that the US just fired the first shot in a trade war with China.

"On Monday, President Trump instructed me to look into Chinese laws, policies, and practices which may be harming American intellectual property rights, innovation, or technology development," said ambassador Robert Lighthizer in a statement on the US Trade Representative website.

Chinese warnings

China has been warning the Trump administration against bypassing the WTO since January. And even though initiating a 301 investigation is not a violation of the WTO in and of itself, earlier this week Chinese state media was alive with condemnation of the Trump administration for even considering it.

That isn't to say that the US doesn't have a legitimate grievance; experts around the world pretty much agree that China has a problem with stealing companies' trade secrets.

From 2001 to 2016, US imports from China increased by a factor of 3.5, while US exports to China increased by nearly a factor of six — but never mind that.

China consumes a ton of products made by Trump's base. It is the largest market for US soybeans (62% in 2016) and airplanes (25% of Boeing passenger planes in 2016). It the second-largest market for US cotton (14% in 2016), auto (17% in 2016), and semiconductors (15% in 2016). But never mind them, and never mind any of that.

And then there's what a trade war would do to the cost of things Americans buy. The Institute of International Finance touched on this in a recent paper:

"A trade war between US and China will hurt not only Chinese manufacturers, but also upstream suppliers and downstream distributors such as US retailers. Per China's Ministry of Commerce, the final US retail price of imported Chinese goods can be several times of their imports prices.

"For example, a regular down jacket selling for $200 in US retailers usually costs only $40 to import from China. Retaliatory measures from Beijing will also hurt China-based US businesses, which made $517 billion in revenue and $36 billion in profit in 2015."

If China retaliates, the price of American goods will go up, and markets that were once open to us may start to close.