By: Azhar Azam
*This is one of my opinion pieces that first appeared in The Express Tribune:
https://tribune.com.pk/story/2005446/6-us-china-trade-war-g-20-summit/
Shortly after meeting with President Xi Jingping at G-20 summit in Osaka, President Trump announced that China and the United States would resume the suspended trade talks. As a goodwill gesture, he locked the new tariffs on Chinese goods for an indefinite period and also pledged to allow the US companies to sell technology and components to Huawei.
Earlier at Camp David, the keyboard warrior argued that tariffs have been “very helpful” in making trade deals. The US president was inferring Japan, with which he expects the trade gap to be “straightened up rapidly” and Mexico that conceded to stem the flow of migrants from crossing into the United States to shirk Trump’s tariff shots.
Trump ignited and latter escalated trade battle with China, hoping Beijing to crouch down to his demands for structural changes in Chinese trade and tariff practices but his chastising measures to clip the trade deficit with People’s Republic were raised economic woes for the United States too.
But Beijing’s trade retaliatory actions, in a comeback to Washington’s tariffs on Chinese goods, grimly tweaked the US rural economy. It is for the first time since 2013, the income of the American farmers has plunged by a half and there are increasing number of farm bankruptcies in the states of Illinois, Indiana, and Wisconsin.
China is one of the major buyers of the US soybeans and other agriculture products. As a result of elongating tiff, the soybean prices in the US have descended to the lowest point in a decade. The financial experts arraign Trump’s tariff strategy for the “pretty significant pullback” in the US agriculture goods exports.
Huawei addition to the US Entity List, barring domestic companies to sell or export technology and components to world-leading Chinese telecom and smartphone manufacturer, also pitched trepidation in the cliques of US vendors who scaled back orders and drained the stocks, spelling out the trade war.
Broadcom Inc., a California-based chipmaker has rundown its annual revenue forecast by $2 billion for the fiscal year 2019, citing Huawei ban. At the time of announcing the second quarter results, company CEO and President Hock Tan said “We currently see a broad-based slowdown in the demand environment, which we believe is driven by continued geopolitical uncertainties, as well as the effects of export restrictions on one of our largest customers (Huawei).”
Tan also told analysts “With respect to semiconductors it is clear that the US-China trade conflict, including the Huawei export ban, is creating economic and political uncertainty and reducing visibility for global (manufacturing) customers”.
American manufacturers are apprehensive of Chinese “Unreliable Entities” list to boot, the inclusion to which would irrefutably decline their exports to China. If the precarious trade frictions prevail, it would surely wheeze the US manufacturing jobs, the crux of Trump’s tariffs campaign at China.
Although the employment situation in the United States remained unchanged at 3.6% in May, however US Department of Labor and Statistics (BIS) said that the number of unemployed persons (less than 5 weeks) jumped by 243,000 to 2.1 million in May – that’s more than 13% in a month. The count also included 1.3 million long-term unemployed persons (those jobless for 27 weeks or more).
Bilateral tariffs are fabricating handful of downbeat impacts on the economy of China and the United States. They are diametrically increasing the import and export prices – thereby ramming businesses to flourish, employments to expand, and investments to grow consequently shrinking GDP of the two countries.
In a report on costs of tariffs on the US Information and Communication Technology (ICT) industry, Rhodium Group estimated that the US GDP could suffer cumulative losses of as much as $1 trillion in the next 10 years across all tariff escalation scenarios.
The group’s other key findings revealed that the decoupling ICT trade with China did not bring much of the ICT manufacturing jobs back to the United States while the rest of the world greatly benefited from diverted trade and investment.
If US agriculture exports continue to dwindle, technology companies are constrained to chop their revenue forecasts, GDP is clattering to contract, and most importantly American farmers are writhing and manufacturing jobs are disinclined to return – what Trump has been brawling for?
His trade war rhetoric may be a political gamble to win the US presidential elections yet again but in a highly practical and competitive global market, these kinds of electoral stunts could recoil the economy and national interests of the United States.
In the given circumstances, it is about the right time when Trump should look to decode a trade deal with Xi before the conventional trade war breaks into a full-blown technological fray between China and the United States.
*This is one of my opinion pieces that first appeared in The Express Tribune:
https://tribune.com.pk/story/2005446/6-us-china-trade-war-g-20-summit/
Shortly after meeting with President Xi Jingping at G-20 summit in Osaka, President Trump announced that China and the United States would resume the suspended trade talks. As a goodwill gesture, he locked the new tariffs on Chinese goods for an indefinite period and also pledged to allow the US companies to sell technology and components to Huawei.
Earlier at Camp David, the keyboard warrior argued that tariffs have been “very helpful” in making trade deals. The US president was inferring Japan, with which he expects the trade gap to be “straightened up rapidly” and Mexico that conceded to stem the flow of migrants from crossing into the United States to shirk Trump’s tariff shots.
Trump ignited and latter escalated trade battle with China, hoping Beijing to crouch down to his demands for structural changes in Chinese trade and tariff practices but his chastising measures to clip the trade deficit with People’s Republic were raised economic woes for the United States too.
But Beijing’s trade retaliatory actions, in a comeback to Washington’s tariffs on Chinese goods, grimly tweaked the US rural economy. It is for the first time since 2013, the income of the American farmers has plunged by a half and there are increasing number of farm bankruptcies in the states of Illinois, Indiana, and Wisconsin.
China is one of the major buyers of the US soybeans and other agriculture products. As a result of elongating tiff, the soybean prices in the US have descended to the lowest point in a decade. The financial experts arraign Trump’s tariff strategy for the “pretty significant pullback” in the US agriculture goods exports.
Huawei addition to the US Entity List, barring domestic companies to sell or export technology and components to world-leading Chinese telecom and smartphone manufacturer, also pitched trepidation in the cliques of US vendors who scaled back orders and drained the stocks, spelling out the trade war.
Broadcom Inc., a California-based chipmaker has rundown its annual revenue forecast by $2 billion for the fiscal year 2019, citing Huawei ban. At the time of announcing the second quarter results, company CEO and President Hock Tan said “We currently see a broad-based slowdown in the demand environment, which we believe is driven by continued geopolitical uncertainties, as well as the effects of export restrictions on one of our largest customers (Huawei).”
Tan also told analysts “With respect to semiconductors it is clear that the US-China trade conflict, including the Huawei export ban, is creating economic and political uncertainty and reducing visibility for global (manufacturing) customers”.
American manufacturers are apprehensive of Chinese “Unreliable Entities” list to boot, the inclusion to which would irrefutably decline their exports to China. If the precarious trade frictions prevail, it would surely wheeze the US manufacturing jobs, the crux of Trump’s tariffs campaign at China.
Although the employment situation in the United States remained unchanged at 3.6% in May, however US Department of Labor and Statistics (BIS) said that the number of unemployed persons (less than 5 weeks) jumped by 243,000 to 2.1 million in May – that’s more than 13% in a month. The count also included 1.3 million long-term unemployed persons (those jobless for 27 weeks or more).
Bilateral tariffs are fabricating handful of downbeat impacts on the economy of China and the United States. They are diametrically increasing the import and export prices – thereby ramming businesses to flourish, employments to expand, and investments to grow consequently shrinking GDP of the two countries.
In a report on costs of tariffs on the US Information and Communication Technology (ICT) industry, Rhodium Group estimated that the US GDP could suffer cumulative losses of as much as $1 trillion in the next 10 years across all tariff escalation scenarios.
The group’s other key findings revealed that the decoupling ICT trade with China did not bring much of the ICT manufacturing jobs back to the United States while the rest of the world greatly benefited from diverted trade and investment.
If US agriculture exports continue to dwindle, technology companies are constrained to chop their revenue forecasts, GDP is clattering to contract, and most importantly American farmers are writhing and manufacturing jobs are disinclined to return – what Trump has been brawling for?
His trade war rhetoric may be a political gamble to win the US presidential elections yet again but in a highly practical and competitive global market, these kinds of electoral stunts could recoil the economy and national interests of the United States.
In the given circumstances, it is about the right time when Trump should look to decode a trade deal with Xi before the conventional trade war breaks into a full-blown technological fray between China and the United States.