One country is winning the trade war. It’s not the US and it’s not China

TU Curmudgeon said:

From The South China Morning Post

One country is winning the trade war. It’s not the US and it’s not China
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Donald Trump says “trade wars are good and easy to win”. Conversely, orthodox economists like to say that in trade wars, there are no winners. Strictly speaking, neither view is correct; things aren’t that simple.

The agreement between Trump and Xi Jinping in Osaka last month to put further tariff increases on hold andto resume bilateral negotiations amounts to a ceasefire which marks the end of the first round of theUS-China trade war. So this is a good time to look at how the conflict has played out so far and to examine who, if anyone, is winning, and who is losing.

First, let’s look at theUnited States, which continues to levy tariffs of 25 per cent on some US$200 billion of imports from China.

According to a group of eminent economists, includingInternational Monetary Fund head of research Gita Gopinath, almost all the cost of those tariffs are being borne by US businesses, through lower margins, or by US consumers, in the form of higher prices.

If true, that would make the US a clear loser in the trade war. Except it is very hard to see the effect in US economic data.

COMMENT:-

An interesting look at the situation that goes beyond just the US and China.
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Mycroft said:

There's a reason Trump went on his Asian tour...a couple of times...to such countries as SK, Vietnam, Philippines and Japan, among others. He wants companies who manufacture in China to move to those other countries because it puts pressure on China to resolve the issues that are important to the US. So it's not a bad thing that "Vietnam is a winner"...at least, not from a US perspective. But it IS a bad thing from a Chinese perspective.

One thing I'll dispute that article on is whether the US is bearing the costs of the US tariffs on China. It mentions "a group of eminent economists" and their contentions. The problem is...and the article later alludes to this...that US economic numbers don't support those contentions. US consumers are NOT paying more. US businesses, for the most part, are NOT paying more. And our economy is NOT suffering. The same cannot be said for the Chinese. What appears to be happening is that the Chinese companies/government is paying for the tariffs in a round about way by reducing the prices for goods being sent to the US. So...even though the importers in the US pay the tariffs, those importers are not losing money...the retailers are not losing money...and the consumers are not paying more for the goods. All you have to do is look at the CPI to see this is true.

Now...regarding the trade deficit. This is one of the issues being worked on in the negotiation between the US and China. These negotiations are still ongoing. Assuming they are successful, we will THEN see movement regarding the trade deficit between the US and China. Don't let the current ongoing deficit excite you.

One other thing to understand...and this is very important to Trump's efforts to come to an agreement with China. China has ALWAYS had a "win/lose" attitude. Trump is working to get them to change that to a "win more/win less" attitude. This latest agreement between him and Xi is an indication that China is starting to move toward that attitude. When they do finally embrace that concept, they will be a worthwhile trading partner for the whole world.

Click to expand...

Mycroft said:

There's a reason Trump went on his Asian tour...a couple of times...to such countries as SK, Vietnam, Philippines and Japan, among others. He wants companies who manufacture in China to move to those other countries because it puts pressure on China to resolve the issues that are important to the US. So it's not a bad thing that "Vietnam is a winner"...at least, not from a US perspective. But it IS a bad thing from a Chinese perspective.

One thing I'll dispute that article on is whether the US is bearing the costs of the US tariffs on China. It mentions "a group of eminent economists" and their contentions. The problem is...and the article later alludes to this...that US economic numbers don't support those contentions. US consumers are NOT paying more. US businesses, for the most part, are NOT paying more. And our economy is NOT suffering. The same cannot be said for the Chinese. What appears to be happening is that the Chinese companies/government is paying for the tariffs in a round about way by reducing the prices for goods being sent to the US. So...even though the importers in the US pay the tariffs, those importers are not losing money...the retailers are not losing money...and the consumers are not paying more for the goods. All you have to do is look at the CPI to see this is true.

Now...regarding the trade deficit. This is one of the issues being worked on in the negotiation between the US and China. These negotiations are still ongoing. Assuming they are successful, we will THEN see movement regarding the trade deficit between the US and China. Don't let the current ongoing deficit excite you.

One other thing to understand...and this is very important to Trump's efforts to come to an agreement with China. China has ALWAYS had a "win/lose" attitude. Trump is working to get them to change that to a "win more/win less" attitude. This latest agreement between him and Xi is an indication that China is starting to move toward that attitude. When they do finally embrace that concept, they will be a worthwhile trading partner for the whole world.

Click to expand...