Donald trump raised duties on Chinese goods without waiting for the end of negotiations with China about a truce in the biggest trade war of our time.
Trump started it last year and promised an easy victory. Since $360 billion in trade between the two largest economies came under restrictions that inhibited the growth all over the world.
The President blamed the escalation on the evil Chinese. But the move could be a bluff in an aggressive stage of negotiations, experts say, as the tariff war primarily harm American consumers and businesses, who now pay more for Chinese goods and accessories.
“The new tariffs of 25% will be another shock to the American economy. After all, American companies faced with increasing costs. And don’t forget that the Chinese will respond to a mirror,” said Deborah Elms, Asian Trade Centre from.
So Trump is more profitable to get China concessions, to announce the triumph, to relieve the tension in the stock market and to do other things.
Potentially he has a few more days, since the new duties imposed only on those goods which have not yet shipped from China and shipping by sea takes two to four weeks.
An eye for an eye
Americans buy Chinese goods at a half a trillion dollars a year, then sell to China is almost five times less.
In July, trump has imposed 25% duty on Chinese imports with a volume of $ 50 billion, and in September imposed a 10% additional $200 billion of imports and threatened to increase the rate to 25% since the new year. But then took a break for negotiations with the Chinese, which continued with varying success for several months and was to end on Friday.
Before the last round trump has accused China of trying to evade agreements and in the first minute of the final day of negotiations carried out his threat and raised the duties on six of the thousands of goods – from shovels to projectors.
Now, additional rate of 25 per cent of the total $ 250 million, or almost half, of the import of Chinese goods in the United States. And trump has threatened to impose duties on the other half.
The Chinese expressed regret and promised to meet the mirror, but the space in the wage war with them is almost gone.
“China has imposed prohibitive duties on nearly 90% of U.S. imports, so an eye for an eye will not work.
But they had in stock the new restrictions and prohibitions for U.S. companies, as well as the rejection of the first commitments to facilitate their access to financial markets,” wrote economist George Mangus, specializing in China..
“Negotiations are continuing, and because trump is trump, the new tariffs can still be used as a carrot and cancel if China will assume the obligations from which he, according to the Americans refused. But while everyone is no matter,” writes Mangus.
Washington accuses Beijing in the refusal of the progress made in the negotiations of the agreements and a reluctance to change the laws to protect intellectual property of American companies.
Who will win?
Escalation of a trade war would undermine the economy of China, the US and the world as a whole, warned the international monetary Fund.
Chinese industry except electronics manufacturers may lose up to five percent of the workforce, and in the U.S. agriculture and transportation equipment manufacturers will lose 1% of the employed, estimated by the IMF in the April semi-annual report.
According to the head of the Fund Christine Lagarde, because of the trade war, the U.S. will lose 0.6% of GDP, and the Chinese economy will lose 1.5% of growth.
Economists at Moody’s and is tipped as the U.S. recession by the end of 2020 in the absence of a deal with China. It is fraught with political problems for trump, because that’s when it will be re-elected for a second term.
Chinese response to first hit the farmers loyal to Trump. To compensate for the loss, his administration gave them $ 12 billion in the past year and thinking about new subsidies.
Other victims were less fortunate. The overall effect is not so noticeable because the losses of the corporate sector from duties trump is less than the profit from its last year’s tax benefits. However, the turbulence of the stock market shows that investors are increasingly worried about the future of American business.
He did not hide her concern.
“American companies suffer losses because of the fees, and they are particularly pronounced in the sector of production of goods”, – complains the President of the national business Association NABE Kevin swift.
Alexey Kalmykov, BBC