Tuesday, 26 May, 2020

Trump calls trade war with China ‘a little squabble’

Consumers are already seeing price hikes from the last round of Trump’s tariffs Consumer prices on luggage and major appliances have already increased as a result of previous tariffs
Ginger Lawrence | 16 May, 2019, 10:39

President Donald Trump's trade war with China could cost the average American family of four up to $2,300 a year, according to a report on the effect of tariffs on the US economy and workers. The Trump administration is now cracking down on such "theft" with measures ranging from monitoring and constraining Chinese scholars and students visiting and studying in U.S., to red-flagging Chinese tech giants such as Huawei and ZTE, both of whom are expected to face a crackdown in the United States in the coming days.

"It's more than a little squabble, Kennedy".

So is the trade war making Americans better off or worse?

On a brighter note, Betty Wang, an economist at ANZ bank, said in a research note that property investment had picked up over the first four months of the year thanks to "a big jump in developers' funding conditions", with bank loans, down payments and mortgages all growing at a quicker pace. The answer makes a big difference to the economic welfare of American workers.

At first glance, the jobs data does look good for Trump's argument.

By most measures China remains enviably vibrant: Over the first three months of 2019, its economy grew 6.4% from a year ago - more than twice as fast as the US grew.

China's economy, by contrast, is in trouble.

The good news for Trump doesn't stop there. This was also the lowest reading since November a year ago. A main issue that the USA has demanded that China address is intellectual property theft by Chinese companies. The rest, which include chemicals, paper and textiles, either didn't enjoy a boost or lost ground during the period. From the Opium Wars of the mid-19th century to Japan's occupation of huge swaths of the country in the 20th, China's 19th- and 20th-century history is one of subjugation and colonization at the hands of foreigners.

On May 5, Trump tweeted that he would raise a 10% tariff rate on China up to 25%, ahead of a week that was supposed to further trade re-negotiations between the two countries. Canada targeted some paper products in retaliation for tariffs on steel and softwood lumber. Referring to Trump's economic nationalism, she added that Argentina should return to the "strong internal market" policies she carried out when she was in power, while failing to add that she inherited a booming economy and left her country bankrupt.

Jacobson - who has spent years living and teaching in China - also emphasizes that Beijing is playing a long political game, rather than one at least partly tied to election cycles. What about wages, which account for 70% of an employee's average compensation? The U.S.is a rich country precisely because it has such low tariffs.

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There are two important things to say about that 3.2%.

Manufacturing is 0.2 percent lower than April 2018, while total industrial production remains 0.9 percent higher.

That came after Beijing retaliated for USA tariff increases Friday on $200 billion of US goods. Protected industries are adding jobs, but wages aren't living up to expectations.

Estimating the impact of the tariffs is hard, as the costs will be borne by some com-bination of producers, importers and end consumers.

But for the president, trade-deficit analysis is not situational.

"China buys MUCH less from us than we buy from them, by nearly 500 Billion Dollars, so we are in a fantastic position", Trump wrote.

However, while leaders will want to prevent the economy from taking a bad hit, Julian Evans-Pritchard of Capital Economics was sceptical about how much they will do.

And none of this says anything about another crucial part of the equation: consumer prices.

"The undershoot in April activity shows the Chinese economy had yet to find a sure footing even before the latest escalation in the trade war".