Friday, February 10, 2017
America, China and the risk of a trade war
The United States and China are major trading partners that have expanded greatly in the wave of globalization led by the US. With the new administration, President Trump has proposed blanket tariffs on many countries including Mexico and even China. President Trump in the past has accused China of not following trade rules. Trade war with China is not something that is conducive to the US economy.
If President Trump decides to implement some tariff or new policy in regards to China, it could lead to retaliation which, would really hurt the US economy. Similarly, certain industries within the US would be crippled by a Chinese boycott and the acquisition of these goods from other countries would stifle economic growth. Examples of these industries are airplanes and soybeans as planes can be acquired from Europe and price drops within the market could affect the US soybean industry.
Hopefully, the WTO can keep the trade system in check as there is a process that countries can resolve issues in but the rules within the WTO are not super clear leading to unclear laws.
President Obama created the Trans-pacific Partnership to create laws that would protect American industry and create better trade relations with the US so that unfair competition could be avoided. This was going to include China in the future however, President Trump discarded it. While many people do not know what the future of trade is going to look like under President Trump, one can hope that a trade war with China can be avoided.
http://www.economist.com/news/finance-and-economics/21715656-trade-tensions-will-mount-destructive-trade-war-can-still-be
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5 comments:
I agree with you, that ruining trade relations between China will probably hurt the American economy way more than it would hurt China's economy. The price of local goods and services would increase heavily as local cost of production and demand increases. Hopefully, the World Trade Organization can step in and resolve any potential issues.
if Trump goes through with this blanket tariff it could mean some real trouble for the united states. i agree that this would hurt the U.S economy more that the Chinese Economy. this would raise the price of goods in the united states because many companies buy there materials from china to make their products and if they have to buy these materials else where it will be more expensive to buy which will increase the price consumers have to pay for the final product.
A trade war with China would hurt our economy as well as future relations with the nation. I agree with both Zach and Shaaref that this will cause a rise in the cost of domestic goods as the cost of these goods would rise. Trump should instead look to create a stronger relationship with China by devising a new trade agreement that benefits both sides.
It also does not help that Steve Bannon, Trump's chief strategist, made the comment predicting a war with China over the South China Sea in the next five to ten years. With rhetoric like that, I cannot imagine Sino-American relations will get better with the current administration, in trade or general diplomacy.
Even though there are comments that Chinese economy would not be hurt as seriously as the American economy, but I still doubt it. Most Chinese products exported to American are cheap goods which depend on cheap labors. If America stops importing from China, those workers are actually affected most, intensifying the unemployment problem in China. I do not think China and America will get into a real trade war. I feel what Trump did was to press or threaten China to get involved in the negotiation of probably some new economic order.
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