The US-China trade war is yet to be over

Saul Bowman
March 7, 2019

Trump's supporters point to his talks with China and other USA trading partners along with the renegotiation of Nafta as efforts that will help reduce the U.S. trade deficit.

The President has used similar studies to impose tariffs on steel and aluminum and has threatened to apply them to imported cars and vehicle parts. Their research also revealed that workers in many Republican-leaning counties suffered the most economically from Trump's trade disputes. In Trump's zero-sum view of trade, a deficit indicates that America is somehow losing or being taken advantage of-you know, in the same way that a grocery store is taking advantage of you by selling you food.

"This is a major reason why economists say, 'You really don't want this as your scorecard, "' said Phil Levy, a former senior economist for trade with president George W. Bush's council of economic advisers.

Trump and his supporters have cast the blame in part on the US Federal Reserve, arguing that its decisions to hike rates past year contributed to the strengthening of the dollar.

More work remains on a deal that will ensure that Beijing will follow through on its commitments, US Trade Representative Robert Lighthizer told Congress last week.

The Fed said slowing global growth and the government shutdown weighed on the United States economy at the start of the year but that it continued to grow.


Following a spat between the United States and the EU when America lifted tariffs on steel and aluminium, Mr Trump and European Commission President Jean-Claude Juncker past year reached a truce.

Investors, who have swung markets based on reports of progress in trade talks, seemed to yawn at the deficit news though, with the S&P 500 down just about 0.2% late Wednesday morning. In a March 2 speech to a conservative political group, he called them "the greatest negotiating tool in the history of our country" and credited them with bringing trade partners such as China to the bargaining table. He's now pursuing separate deals with China and the European Union.

That was offset by the gains from protectionism derived by USA producers benefiting from the tariffs, the economists found. "Right now, that's what we're looking at - there are never any guarantees, but I'm an optimist on it".

Weinstein said the President appears to be relying on a 2018 analysis of data from the 1990s, when the U.S. represented a larger share of the global economy and enjoyed more leverage over exporters in other countries.

"We compute that tradeable real wages fall the most in heavily GOP counties because of the [trade] war", the study found. The United States, which also slapped duties on imported steel, aluminum, solar panels and washing machines, had record imports from 60 countries in 2018, led by China, Mexico and Germany.

The retaliatory tariffs Trump provoked from China also hit major U.S. agricultural exports such as soybeans: shipments of that item fell $US4 billion past year. But that doesn't mean the trade war ends. If the tariffs continue, about US$165 billion worth of trade would be redirected each year, they added.

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