CNN’s website published an article by author Jill Disis titled “Trump Promises to Win Trade War with China, but He Fails” on October 25, excerpts from which follow.
US President Donald Trump has launched a trade war with China. But as the president lobbies hard for his re-election, he doesn’t have much to show off as far as this tricky trade war is concerned.
Trump has vowed to cut the U.S. trade deficit, but on the contrary, it’s at an all-time high. He wants China to buy more U.S. products, but China isn’t buying as much as Washington would like. Moreover, he has made little progress on the major structural issues that matter most to U.S. companies.
Despite Trump’s pledge to narrow the U.S. trade deficit by imposing heavy taxes on Chinese goods, U.S. imports over exports expanded to more than $67 billion in August, the highest level in 14 years. According to the U.S. Census Bureau, the U.S. trade deficit with China fell about 7 percent in August from July, but still reached about $26 billion.
The increase in the overall U.S. trade deficit had more to do with the neo-crown epidemic than with U.S.-China relations. As countries shut down their economies, the epidemic caused foreign trade to stagnate. Even before the outbreak, the difference between U.S. imports and exports was larger than it was when Trump took office.
As China has reopened its economy, the country’s imports and exports have been surging. China’s trade surplus with the U.S. was about $31 billion in September, despite the impact of the new crown epidemic on Chinese trade, according to Chinese customs data. The U.S.-China trade war also hit U.S. farmers hard at first, though a recent recovery in U.S. soybean sales is starting to ease some of the pain for U.S. farmers.
William Reinsch, an expert at the Center for Strategic and International Studies who was president of the National Foreign Trade Council for 15 years, said, “The bottom line is that the tariff measures have caused a lot of collateral damage in the U.S. and have not served their intended purpose.”
At the start of 2020, Trump and China reached a limited trade deal: the two countries agreed to cut some tariffs, allowing Beijing to avoid additional U.S. tariffs on about $160 billion of Chinese goods. China also agreed to buy $200 billion worth of U.S. products over the next few years.
That was before the neo-crown epidemic disrupted the global economy. Although White House senior economic adviser Larry Kudlow said in August that Washington’s trade relationship with Beijing was “excellent,” talks aimed at reconsidering the above-mentioned temporary trade truce and discussing future agreements in detail appear to have been postponed indefinitely.
Reinsch said: “Trump will fail for very clear reasons. You can see it in his failure to make progress on the so-called ‘structural issues’ that are the primary basis for (his administration’s) actions.”
Meanwhile, China is emerging from the neo-crowning epidemic as one of a handful of major countries that look to be stabilizing their economies. The country’s economy grew 4.9 percent last quarter from a year earlier as it brought the neo-crown epidemic under control, marking the second consecutive quarter of positive growth. The International Monetary Fund expects China’s economy to grow by 1.9 percent this year, compared to the United States and Europe, which will contract significantly. The IMF predicts that China will be the only major economy to expand in 2020.
Escalating tensions between the US and China have not even stopped US companies from trying to expand their business with China. In addition to China’s recent strong trade figures, U.S. direct investment in China actually grew 6% year-over-year in the first six months of 2020. In addition, China has just raised $6 billion through an international bond offering directly to U.S. investors, the first time in more than a decade that China has opened up related bonds to U.S. investors.
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