As the United States and China have reached a temporary truce in their costly trade war, Beijing has agreed to buy $200 billion of American-made goods in over two years. Critics wonder how China can continue with its commitment to purchase a large quantity of goods from the United States over a short period of time. Simple, by reallocating orders that have gone to American allies (agriculture for Latin America and manufactured goods from Europe and East Asia) to American exporters and the Chinese government's ability to tell state-run companies to purchase more American goods.
But with the signing of Phase 1 deal between the two countries, American allies will soon face a loss of a substantial amount of business that they have enjoyed the past few years with China when they decreased imports of American goods and found other substitutes in Europe and Latin America. Other than the loss of China's giant consumer economy with the trade deal, American allies also dislike the continuation of the 25% tariffs the United States has on a wide range of Chinese-made goods subsidized by the government. The tariffs could divert the Chinese-made goods to Europe and other places when the allies would rather export their own goods instead of being flooded by Chinese alternatives.
Is the beginning of the U.S.-China trade agreement alleviating the battered global economy or is it undermining the international trading system?
https://www.nytimes.com/2020/01/23/business/economy/china-us-trade-deal-allies.html
1 comment:
The economic policy adopted by Trump administration has given Chinese businesses a hard blow, as they continue to struggle to divert their trade relations to Europe and Asian countries. Since, intellectual theft and industrial policies of China are not acceptable by Trump Administration, Chinese companies such as Huawei are struggling to secure trade deals with with American allies,especially with Great Britain. Indeed by importing 200 billions dollars worth goods from America, is a way of easing off trade with countries, where America continues to put pressure to impose tariffs on chinese goods. This is going to impact global economy really badly.
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