Three reasons why the US-China trade war is difficult to end soon

Three reasons why the US-China trade war is difficult to end soon 0

Three reasons why the US-China trade war is difficult to end soon

US and Chinese delegations at a business discussion dinner after the G20 summit in Buenos Aires, Argentina, December 1.

The US-China trade war is escalating again after the US increased tariffs on $200 billion of Chinese goods, leading to a similar retaliation by China targeting $60 billion of US goods.

Associate Professor of Economics Greg Wright from the University of California at Merced (UCM) said that although US-China negotiations can be resumed, there are three reasons why the trade conflict between the two countries cannot end soon and will continue.

The first reason is that the fundamental disagreements between the US and China still have no way out.

The most urgent thing that the US asks is that China must change the basic characteristics of its economy, but Beijing’s leadership has no motivation to do that.

The most important and longest-standing problem is that the rapid growth of the Chinese economy over the past decades was partly due to large subsidy programs for key companies and industries  in

Beijing is also not acting strongly enough to protect the intellectual property assets of foreign companies doing business in China.

But China is unlikely to end industrial production subsidy programs or tighten enforcement of intellectual property protection laws in the short term, partly because the Chinese economy is growing slowly.

China can transform its economic model in the long term if the right incentives emerge, but it remains unclear whether the administration of US President Donald Trump has the patience to compromise short-term goals, thereby creating

The second reason why the US-China trade confrontation may continue for a long time lies in the US’s negotiating stance, which puts too much emphasis on `sticks` and underestimates `carrots`.

Before the trade war broke out, Chinese companies faced high tariffs when exporting goods to the US, some of which were imposed before China joined the World Trade Organization.

These tariffs may remain in place regardless of the outcome of US-China trade negotiations.

China does not want to be seen as bowing to pressure from the US when it is already subject to high and non-negotiable tariffs.

The damage caused by the trade war is getting bigger and bigger, both in China and the US, and could be much bigger because of the impact of new tariffs that the two sides target each other.

Three reasons why the US-China trade war is difficult to end soon

US President Donald Trump (left) received Chinese President Xi Jinping at the Mar-a-Lago resort in Florida in 2017. Photo: Reuters.

Up to now, American consumers may not have paid attention to the US tariffs on China because they affect thousands of products and in some cases, to maintain competitiveness and retain market share, the

However, according to a recent study by the US Federal Reserve branch in New York, Columbia University and Princeton University, the US-China tax war is costing US consumers about 11 USD/month.

President Trump also announced that he will impose tariffs on all untaxed Chinese goods in the coming months if an agreement with Beijing is not reached.

As the cumulative impact of tariffs increases over time, it becomes increasingly urgent for the US to gain major concessions from China to `justify` heavier losses, but it is less likely that China will

Hong Van (According to Conversation)

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