US-China Trade War Hurts Both Economies

Money Time |

President Donald Trump's decision to start a trade war with China has harmed the world economy. Likely, the impending 'partial deal' that has now been negotiated will be claimed as a victory by both sides.


The deal that is due to be signed will remove the tariffs on Chinese imports with effect from 15th December. This will affect around $156billion worth of Chinese goods ranging from computers to cell phones to toys.

However, it is unlikely that Trump will remove all of the tariffs because the administration sees them as a way to keep the Chinese in line.

Handshakes and Smiles Hide Harsh Truth

President Trump was seen shaking hands with the Chinese President, Xi Jinping at the G20 Summit in June. 

Xi Jinping will likely claim that China gave little in return for the easing of tariffs while Trump will be able to maintain his outwardly strong stance and claim that several concessions extracted before the agreement was achieved.

However, whatever the two men say, the fact is that the trade war has damaged the world economy and, additionally, has hurt both the US and Chinese economies. 

According to a recent UN report, it has been the US consumer who has been hit the hardest because of the higher prices in the market place.

The tariffs had impacted the Chinese economy to the tune of $35billion by June 2019. It is probably unlikely that all the tariffs will be removed especially since the US Presidential election takes place next year. 

President Trump will want to maintain a strong stance to impress the voters as well as keeping open the door to new deals.

At the time of writing it is uncertain when exactly when the deal will be finalized but it could be that Xi may produce this as he heads towards a summit in Brazil. However, Trump’s office would like a formal signing to take place in the US, particularly in Alaska, Hawaii or Iowa where the President is popular.

Meanwhile, Beijing will continue to look for a complete cessation of tariffs and will push to see how much they can get. Their satisfaction depends on how many of the tariffs are removed and what other elements are included in any deal.