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The United States may not be done with threatening financial tariffs against China, continuing the back and forth the rhetoric that is leading to much uncertainty in the greater market.
As part of the economic threats made by the United States towards China are indications that tariffs can be imposed on up to $150 billion of goods imported from China. The introduction of tariffs may lead to an increase in manufacturing jobs in the United States, a point often repeated by President Donald Trump on the campaign trail, but may be a double-edged sword in that it will potentially lead to higher prices for consumers.
In addition to the trade imbalance between the United States and China are concerns regarding abuses of intellectual property by many Chinese businesses. These intellectual property abuses are not persecuted by Chinese authorities who take a more hands-off approach.
China has also been accused of propping up the businesses through state support in a number of industries and making it difficult for other global companies to compete. An example of this is in the steel industry where many Chinese state-sponsored companies will flood the market with cheap steel, making it difficult for global steel producers to survive, particularly in countries with social welfare programs that add significantly to the cost of operation.
This state support is part of China’s 2025 platform, in which the Chinese government is seeking dominance of certain key industries, a process that has infuriated many in the U.S. The United States is proposing a 25% tariff on certain Chinese exports to the U.S.
China has responded to the latest threat today by indicating that they are ready for a trade war if the United States is pursuing one. China indicated that it will protect their own interests of the United States continues an arbitrary and relentless verbal attack on their economy.
The increased rhetoric comes just days before a scheduled meeting by the Commerce Secretary of the United States, Wilbur Ross.
Although markets have taken notice of some of the earlier interactions between China and the United States in regards to these trade action, the current reaction has been muted and unobservable. If a trade war were to hit between the two countries, it might spell a large negative factor on economic trade and the stock market.
The America first policies of United States President Donald Trump paid dividends in the month of March as record exports have resulted in a decrease in country’s trade deficit for the first time in seven months.
The information was made public in a report by the Commerce Department which stated that the deficit fell more than $8 billion from $57.7 billion in February to $49 billion in March which was the lowest mark since September.
The massive trade deficit has been a major area of focus for President Trump and he has often blamed the problem on the trade policies of past presidential administrations along with abusive practices from countries that have engaged in trade with the United States.
Members of the Trump administration are scheduled to visit with Chinese officials in Beijing later in the weeks to speak about the trade deficit America has in Chinese goods. The two countries have not seen eye to eye recently and President Trump has talked of tariffs as high as $150 billion being placed on goods imported by Chinese business interests. The Chinese have vowed to meet any such actions by President Trump in equal measure. In the meantime, the U.S. trade deficit with China fell 11.6% in March and is now at $25.9 billion.
President Trump has also been critical of the NAFTA trade agreements the United States has made in the past with the nearby countries of Canada and Mexico and has set Tariffs on all steel and aluminum imported into the country.
Despite the good news reported by the Commerce Department for the month of March, the deficit is up by nearly 19% at $163 billion for the year. President Trump is convinced that the deficit endured by the country is a blatant sign of weakness that can be remedied by becoming more tough-minded in its trade policies.
Many economists have disagreed with the President’s assessment of the situation and feel that the deficit is a result of the much more complicated issues with the American economy such as the country’s long-term tendency to consume more than it produces.