Trump Trade Wars
Donald Trump’s Trade War with the world involves multiple battles with US allies and others alike. With the world’s two largest economies locked on a bitter trade battle, the dispute has seen the US and China impose tariffs on hundreds of billions of dollars worth of one another's goods. The trade war has negatively impacted the economies of both the United States and China, with higher prices for consumers and financial difficulties for farmers and manufacturers, and slowed economic growth. As the trade war continues, it reduced international trade, with Trump’s tariffs policy aiming to encourage consumers to buy American products by making imported goods more expensive, and China doing the same. The US has imposed tariffs on more than $360bn (£268bn) of Chinese goods, and China has retaliated with tariffs on more than $110bn of US products.
- At first many economists and analysts dismissed any impacts - the believe it would be short lived
- Trump's reason for the trade wars is that the US entered into "very stupid" deals in the past - these need to be fixed
- 01/18 Tariffs: solar panels, washing machines and aluminum (START OF TRUMP TRADE WAR)
- primarily impacted China and Korea
- 07/18 Tariffs: steel, electronics, textiles, etc
- Trump invoked section 232 of the 1962 Trade Act to put a 25% tariff on 29 Billion of steel imports
NAFTA (North America) Trade WarFront
- Requested major revisions of NAFTA with Canada and Mexico
- Mexico negotiated an updated NAFTA in August 2018
- 09/17/18 - Announced tariffs on $200 billion of Chinese goods imported into the US
- 07/18 - Placed Tariffs on $50 billion of Chinese imports
- Total Imports from China are roughly $500 billion around this time
- The Chinese only import ~$100 billion from the US - this makes it hard to strike back in a trade war
- China has slowly weekend its currency from 4/2018 onward (10% circa Oct 2018)
- Chinese stock market has dropped significantly since start of trade wars (~20% Circa Octover 2018)
- High Level US Demands
- Reduce the role of state-owned firms in China’s economy
- Allow U.S. firms to own majority stakes of businesses in China
- Remove requirements on U.S. tech firms to reveal their secrets
- Why the War?
- Concerns that the US has lost over 2M jobs to China (many in highly-paid manufacturing)
- Concerns of Chinese theft of US Intellectual Property
- Concerns that China does not allow US companies to fairly compete in China (restrictions, JV requirements, etc.
- Tariffs will hurt US citizens and fail to help US Businesses
- Instead of starting to produe domestically and crate US jobs, companies will shift production to countries without tariffs:
- For example, iPhone production may ship from China to Mexico (where there are no tariffs)
- In the Process US consumers will still have to pay higher prices, but will not benefit from jobs