Lull in potential trade war between United States and China

Published On April 16, 2018 | By Michelle Neha | Business, International, News, Politics

Investors look at an electronic board showing stock information at a brokerage house in Nanjing, Jiangsu province, China, on April 16. (REUTERS/file photo)

Michelle Neha

U.S. President Donald Trump announced on April. 6  he planned to increase trade tariffs on Chinese goods to a $100 billion after China responded with a list of American products it plans to tax in a growing war of words between the two nations.

China revealed the list of 128 products it intends to impose tariffs after Trump first announced plans to raise trade tariffs by $50 billion April 3 on Chinese goods. The response by Beijing however was met with Trump’s latest threats of even more tariffs.

The trade war, however, has remained a war of words and negotiations may overcome differences. Nevertheless the moves has been met with significant backlash from business analysists and economists on the world stage.

“The main impact on Canada is going to be indirect,” said Pierre-Pascal Gendron, professor at the Business School at Humber College. “If that trade war with China got worse, but there are signs that it’s going to improve because I think the parties understand that a trade war doesn’t make any winners.”

Gendron believes if the trade war occurs, the affected goods might be diverted to the Canadian market, which would be flooded with goods headed for China and U.S.

He said the move behind the American tariff threats is that the president believes it could force the return of manufacturing that left back into the country. That manufacturing would move to other countries with cheap labour, he said.

“The trade war with China will not bring back manufacturing that has left,” Gendron said. “That is an illusion. It’s never worked anywhere.”

Although agriculture doesn’t account for a large portion of employment, it’s a politically strong sector, and tariffs will hit hard certain agriculture, such as the pork, beef and soy sectors, he said.

The spat between the two countries, however, might not affect the Canadian market for pork, said John Ross, the executive director of the Canadian Pork Council.

U.S. pig farmers may be affected by a trade war.(Reuters/Russell Cheyne)

There are other exporters, such as the European Union, which can meet the demands of the Chinese market, he said.

The U.S. only exports around two per cent of it’s hog production to China, and it wouldn’t affect the price of pork or sales, Ross said.

But the U.S.-China trade tariffs have pushed the Americans to resume talks on the North Atlantic Free Trade Agreement (NAFTA) and Trump has asked his advisors to review the Trans-Pacific Trade Pact, which he pulled out from last year.

“It’s not a coincidence that the U.S. president has gone softer on NAFTA, because he doesn’t want a trade war on all fronts,” Gendron said.

Leave a Reply

Your email address will not be published. Required fields are marked *