China 'theft' of US jobs and wealth must 'come to an end'

Gladys Abbott
February 6, 2019

The higher cost of US-China trade would prompt companies to shift away from current east Asian supply chains, but report suggests it's unlikely that US firms would pick up that business.

The impact on total USA imports from China in 2018 was "muted", the researchers wrote, largely because of the rush to get ahead of tariffs that it caused on the larger $200 billion list. "China tensions are those which are more competitive and have the economic capacity to replace US and Chinese firms", UNCTAD said.

But it also illustrates how tariffs may do little to fulfill another of Trump's stated goals: reducing the US trade deficit.

A USA plan to hike tariffs on China next month could trigger an economic downturn and let other countries take over about $200bn of Beijing's exports, a United Nations report said on Monday.

The UNCTAD study pointed to the soybean market, where the tit-for-tat tariffs have resulted in "trade distortionary effects" that have benefitted Brazil especially, since the country has suddenly become the main soybean supplier to China. "China trade. Japan, Mexico and Canada will capture over $20 billion each".

However, the study also underscores that even for countries whose exports are set to increase because of the trade sparring, not all the results will be positive. He last week vowed to negotiate a "comprehensive" trade deal that would include meaningful changes in economic policy and bring an end to the theft of USA intellectual property. But because the magnitude and duration of tariffs is unclear, Brazilian producers have been reluctant to make investment decisions that may turn out to be unprofitable if the tariffs are revoked.

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"Countries that are expected to benefit the most from U.S".

The world's two largest economies have 24 days left in a three-month truce in their trade war before USA duty rates are due to rise sharply - an escalation that economists say could be a powerful negative shock to the global economy.

The study also underlines the "common concern" that trade disputes have an unavoidable impact on the "still fragile" global economy, particularly on developing, commodity-rich countries that are dependent on exports. Moreover, Brazilian firms operating in sectors using soybeans as inputs - such as livestock feed - are bound to lose competitiveness because of price rises stoked by Chinese demand for Brazilian soybeans. This is especially worrying if trade tensions spiral into currency wars, which would threaten the ability of people and companies around the world to pay off dollar-denominated debt, they said.

That impact of the retaliatory tariffs on US exports, the IIF researchers said, would be the focus of one of their next studies.

Trump has vowed to increase tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent now if the two sides can not reach a deal by 12:01 a.m. (0501 GMT) on March 2. March 1, 2019 is the deadline for implementing the measures.

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