The ongoing and protracted tit-for-tat trade dispute between China and the United States has intensified this week – so much so that it prompted a warning from the Organisation for Economic Cooperation and Development (OECD).
The Paris-based think-tank says the world’s economy can’t keep growing if things don’t improve on the trade front.
China has now slapped tariffs on nearly $6bn-worth of US goods in retaliation for the latest round of US tariffs on $200bn-worth of Chinese products.
The increased tensions will likely scuttle the renewal of trade talks between Beijing and Washington, reports Al Jazeera’s Scott Heidler from Beijing. While about 5,000 Chinese products, including household goods from vacuum cleaners to bikes, will be targeted, many US businesses are expected to suffer as well.
“Just before the tariffs were announced in Washington, the Chinese commerce secretary said US protectionism won’t only impact the two countries involved in the trade war, but it will hurt the global economy as well,” says Heidler.
Beyond US protectionism, “I don’t think the goal has been demonstrated or articulated well by the [US] president,” explains Greg Swenson, the founding partner of London-based Brigg Macadam, a merchant banking house for emerging and frontier markets.
“What he (Trump) seems to dwell on is the trade deficit and he picks these arbitrary numbers or targets for trade deficit reduction, which is a mistake. What he should focus on is that China is violating all kinds of free-market and open-market policies and rules. The US has taken China to the WTO 16 times in the last couple of years, and they’ve won all 16 times, but that doesn’t seem to be fixing the major problems, which are theft of IP and the complete disregard for free-market principles.”
Swenson says that Trump has “somewhat lost the narrative or the messaging battle because it looks like the US is provoking a trade war, when, in fact, he’s trying to fix something that needs to be fixed.”
“I don’t think these tariffs will stay in place because they’re self-defeating. It’s not really going to hurt the American consumer or the American economy. In many ways, the president’s playing with the house’s money; the economy is kicking on all cylinders.”
“The Chinese have a lot more to lose if they are in a trade war,” Swenson says, explaining that Americans are importing $500bn-worth of goods from China, whereas the Chinese are only importing $130bn from the US. “So, the US has a much better ability to punish China and that’s obvious.”
Also on this episode of Counting the Cost:
India economy: India is often referred to as the “world’s fastest-growing large economy” but the Indian rupee is now the worst-performing currency in Asia, despite government efforts to turn the tide. Non-essential import restrictions announced this week have left businesses unhappy and there are fears of protectionist policies being put in place. Gregor Irwan, chief economist at Global Counsel, offers his take.
Afghan ice cream: Since the United States invaded Afghanistan in 2001, one song has echoed across Kabul’s neighbourhoods. “Happy Birthday” blasts from the speakers of hundreds of ice cream carts across the capital, but the recent surge in violence before the upcoming elections has caused their profits to plummet, as Charlotte Bellis reports from Kabul.
Australia strawberries: A sabotage scare is threatening to hurt Australia’s strawberry growers. They’ve warned about an overreaction after several people found sewing needles inside the fresh fruit. While some reports turned out to be hoaxes, the devastating effect on the industry is the same, as Andrew Thomas reports from Sydney.
SpaceX passenger: There is now a face and a name for the man who hopes to become the first paying passenger to fly to the moon. US company SpaceX has said Yusaku Maezawa, a Japanese billionaire, is its first customer. The 42-year-old online retailer said it has been his lifelong dream to go to space, as Victoria Gatenby reports.
Qatar-Japan electric cars: Qatar and Japan are teaming up to manufacture electric cars. The new $9bn project involves building several factories from scratch and is supposed to be up and running by 2024. The first car to roll off the assembly line will be called ‘Katara’, and will be launched in conjunction with the FIFA World Cup in 2022. The project is backed by ARM of Japan.
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