China accusations of Donald Trump
Even though Chinese and American relationship was still more or less good, since Donald Trump the new American president, China became the pet peeve of the US. In fact, as said in the article Trump accuses China
“to stealing America’s intellectual property and taking American jobs.”
He blames Beijing of “taking advantage” of US economy and manipulating its currency that has permitted more advantages for Chinese exporters to dominate the American consumer goods markets.
He goes so far as to say that China invented the concept of global warming to make American manufacturing uncompetitive. This trade competition between the both might become a nightmare.
How Donald Trump could beat China on trade?
Of this side, Donald Trump threat to introduce tariffs to raise the price of Chinese goods in the US market by up to 45 percent. Tensions are high and the fears of economists are the counterattack of China and the impact on global economy.
There are two ways in which Donald Trump could beat China on trade:
“He might try to simply to enforce the rules of global trade in the court rooms of the World Trade Organization (WTO). In fact, trade rules are defined by WTO.
“He might accuse China of boosting its economy with subsidies and flooding some American market with cheap imports.
The economist explains that Obama policy had already accused China about that, but Trump’s underlings await more of the new President. The WTO rules are designed to handles the revenges of the both countries. That means, if the system works there will be limits on China and US revenges.
THE WORST-CASE SCENARIO
But everything couldn’t take place like that. The worst-case scenario for trade war between China and America would be if M. Trump decides to “bypass WTO rules or ditch them altogether after a decision does not go his way” says the article.
International organization dealing with the global rules of trade between nation. Main functions: ensure the trade flows as smoothly, predictably.
Who will be the winners and losers of the 45% tariffs on Chinese exports?
The economist explains that M. Trump decided to put 45% tariffs on Chinese exports such as on electronics or clothes made in China, there will be potential winners and losers.
Raising prices of Chinese goods might undermine the purchasing power of the American middle class, the major consumer of Chinese goods: American shoppers “will feel the pinch”. Some American companies, which work with China, would suffer too.
China would be the first casualty. In fact, the U.S. is China's biggest export market, accounting for 18 percent of total exports, and China's overall exports would be expected to shrink at least 9 percent if Trump carried through with his tariff threat.
There would also be significant suffering due to the collapse of businesses and job losses, in fact, it’s estimated that China's exports had created 120 million jobs, including 20 million making products for the US market. As a result, Chinese exporters may not only lose the U.S. market but also the wider market in advanced countries because this war between Washington and Beijing could encourage other countries to become hostile to Chinese products.
First and foremost Donald Trump decision “would clearly violate WTO rules”. Americans will have to expect a revenge of China. In fact, Beijing might retaliate against the imports of U.S. goods, appeal to the World Trade Organization, and accuse the United States of violating WTO rules and regulations.
Numerous respected experts agree that a trade war between the world’s two largest economies is fraught with serious consequences for international trade worldwide.
The winners of this potential trade was would be the American government, which see more tax revenue and also some American companies which will have less foreign competitors.
A backwards step
The article highlights that if a trade war between China and US will burst, it would be a backsliding. Indeed, the General Agreement on Tariffs and Trade (today WTO) has been creating “to avoid a race toward higher tariffs” because they had noted that alone, the countries economies were weaker.
Countries are stronger when they don’t erect trade barriers but work together.
- Written by Pauline Goncalo - February 8th, 2017 -