Developments in the Trade War – Can China Compromise?

  • The trade war with China has drawn many critics, as well as many supporters.
  • China recently signaled they'd be willing to negotiate.
  • President Trump takes issue with the Chinese terms.

Up to this point the Trump presidency has been marked with controversy, uncertainty, disapproval, and excitement. Of All of the president’s policies none embody these characteristics as well as his tariffing of Chinese imports, and the subsequent trade-war with China. This trade war has caused volatility in the stock market, increased costs to American manufacturers, and has threatened US imports into China. It has also has also helped to protect American industry and to give the US leverage against China to renegotiate trade agreements.

An important piece of information that often goes unmentioned in articles regarding US and Chinese tariffs, is the definition of a tariff. Simply put, a tariff is a tax that a company pays the government when the company purchases an item from a foreign country. For example, if the US has a 10% tariff on Chinese steel and a US company purchases $10 of Chinese steel, the company would pay the US government $1. This effectively makes Chinese steel more expensive and encourages US companies to buy American steel.

U.S. trade deficit (in billions, goods and services) by country in 2014

Although the protection of domestic industry is often times the purpose of tariffs, the president claims this is not the primary reason for the recent tariffs on Chinese imports. President Trump has repeatedly emphasized his use of tariffs to force China, and other countries, to remove their own “unfair tariffs” on US goods and to renegotiate the “unfair” Bush and Obama era trade deals. On August 15 of 2018 the president tweeted:

Amid crumbling markets and a devaluation of currency it seemed that China may be ready to restart negotiations to end the trade war. On Monday President Trump stated that “China wants to make a deal and if we can, we’ll make a deal.” However, the president was less than satisfied with the terms China was offering, stating “China wants to make a deal, and I tell this to President Xi who I really respect … I told him very strongly, I said ‘Look, you’re making $500 billion a year and stealing our intellectual property…We can’t make a 50-50 deal.’” Trump also stated that, “We have to balance our trading relationship, at least to an extent, and they were unwilling to do that.” Both sides desire to come out of this trade war as the victor and until one side makes some serious concessions, there will be no resolution.

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Kyle Reynolds

I'm a young writer who for a long time has been fascinated by history, politics, economics, and everything else that makes the world go round. I love to hear from my readers and can be contacted at kylereynolds2017@gmail.com.


http://lincolnianthought.blogspot.com

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