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United States -China trade war ........What are the expectations?

2019-05-14 01:39 am | Resource: NEWS | No Views : 40

United States -China trade war ........What are the expectations?

Economic history of various eras has witnessed many trade wars, but the most recent is the recent trade war between the United States and China.

That war began last year, specifically on 22 March 2018, after US President Donald Trump announced the intention of the United States to impose a customs duty estimated at 50 billion US dollars on Chinese imports, under Article 301 of the Trade Act of 1974, which was enacted for Regulation of unfair trade practices and theft of intellectual property. In retaliation by the Chinese government, the situation has also escalated with the imposition of customs duties on more than 128 American products.

the war

The war began when the intention was to go into effect on July 6, 2018. The US government received $ 34 billion in customs duties on its imports of Chinese goods, equivalent to 0.1 percent of US gross domestic product. China, however, has also imposed the same value on its American will.

This mutual escalation between the United States and China at the commercial level ignited the war, the historically largest trade between them, which was one of the main factors that rocked the global economy and caused the restructuring of export chains around the world,

And led to a slowdown in global economic growth at the end of last year, according to the International Monetary Fund (IMF), which stressed that the global economy is still vulnerable to further trade tensions and urged countries and governments to be very cautious and attentive.
 
The truce

It seems that the United States and China finally succumbed to the warnings of the IMF, the Washington Post reported last December that a truce between the two countries for 90 days, represented a turning point for the war and prevented the escalation of the situation. The truce came after the agreement between US President Donald Trump and Chinese President Xi Jinping during their meeting in Argentina at the end of the G-20 summit, which delayed the United States to increase tariffs from 10% to 25% for nearly half of its own Named.
 
News spread, weeks after the truce, that the United States and China were close to reaching an agreement on the negotiations, which revolves around:
  • China's approval to buy a huge amount has not yet been determined from industrial products, agricultural and other products from the United States to reduce the imbalance in trade balance between the two countries in exchange for the lifting of the United States customs duties on the Chinese barricades coming to it.
  • China's introduction of structural changes with respect to intellectual property protection, forced transfer of technology, non-tariff barriers, electronic theft and cyber-intervention.

But Trump said through his account, "Twitter" talks with China is going very slowly, and threatened to cancel the economic truce and the resumption of war. On the other hand, the White House warned that the start of tariff increases if the parties can not reach an agreement within the specified time frame.

China's negotiations with the United States have seen progress in terms of China's announcement that it agrees in principle to increase its imports of US agricultural products, energy products and other industrial products and services as part of the solution to eliminate the trade imbalance between the two countries, the Washington Post reported. This promise could form the basis of an initial economic agreement, helping Trump to conclude a successful business deal for US farmers ahead of the 2020 elections.

Some of the thorny points that might impede the negotiations, including:
  • The US administration is frustrated by what it has considered to be a loosening of China in terms of forcing foreign companies operating in China to disclose some details of technology, despite China's denials of such measures.
  • The two sides still disagree on the US demand that it not interfere significantly with the Chinese economy and protect intellectual property, which is a major source of concern for the United States can not be passed or overlooked without a conclusive agreement.
  • Despite China's approval in March of the new Foreign Investment Act, which said it would deal with some of the above-mentioned issues with regard to the forced transfer of technology, non-tariff barriers, electronic theft and cyber-intervention. Trump said he wanted a "strong deterrence language" to control any deal.
  • Finally, Chinese officials asked the United States to abolish all tariffs.

The repercussions of the escalation of this war at the level of the two countries:

Trump said that it is no easier to move forward on the implementation of the decision to raise tariffs on Chinese imports to 25 percent, and not only that, but can impose further restrictions on Chinese investment in the United States, all from May 10, 2019.

In return, China is expected to respond with more aggressive measures, such as the transfer of its purchases from the United States.

Which could push Trump to escalate threats to charge another $ 325 billion of Chinese goods.

However, the growing risk of serious economic damage to both countries, as well as the political damage that may occur to the Trump administration ahead of its elections in 2020, may make one or both of them reluctant to escalate.
At the investor level

As for the impact of the trade war between the two countries on investors, the Washington Post quoted some investors and executives that the continuation of that war and the escalation of the escalation could damage the climate of confidence and supply chains of some companies in China such as Apple,
 


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