Trade negotiations between the United States and China have continued to deteriorate over the last few weeks. In efforts to pressure the Chinese to make reforms to trade-related issues such as forced technology transfer and intellectual property rights, the United States has raised tariffs on nearly all Chinese exports. While there is a consensus among experts that these trade issues harm U.S. producers and must be dealt with, there is not universal agreement that a trade war is the best way to make it happen.
Who will feel the effects?
It is apparent that both consumers and producers in the U.S. will feel the effects of the trade war.
- Producers will not be able to absorb the increased costs from the raising tariffs and will need to pass them along to consumers.
- Consumers will begin to see the prices increase on a host of retail goods, such as clothing and apparel, toys, and home goods.
In addition, as the Chinese retaliate with increased tariffs on U.S. exports, such as agricultural goods, producers from other countries with lower tariffs are stepping in to take the place of the U.S. exporters. For example, Brazilian soybean producers are more than happy to sell their product to China at a lower cost. Once lost, it may be difficult for U.S. farmers to regain these important Chinese markets.
A political price to pay?
It appears that the effects Dr.of the trade war may hit the Trump administrations base, in agricultural and manufacturing regions, disproportionately. However, the administration may see the trade war as beneficial to Trump’s 2020 reelection campaign, as Trump is being perceived as being tough with the Chinese and holding them accountable to unfair trade practices. That appears to resonate with his base. However, it remains to be seen how long his base will continue to support this approach as both producers and consumers continue to feel the economic pinch of the growing trade war with China.
There’s a lot to know about the short and long-term impacts of a trade war with China and that’s where our experts can help.
Dr. Matt Bluem, program director of M.A. in International Development, has taught business and marketing courses at Saint Mary’s University of Minnesota since 2008. Prior to Saint Mary’s, he worked in both the banking and the non-profit sectors, most recently with a non-governmental organization (NGO) with operations in more than a dozen countries. Matt is an expert in political and economic development and is available to speak with media. Simply click on his icon to arrange an interview.
For his complete profile and contact information, click here.