Why 2 possible deals suggest the US and China need ‘something big to change’ in order to resolve their trade fight

The progress in talks with Europe also comes as Congress has become more adamant about the collateral damage from Trump’s trade tactics — including the hit to farmers that the administration tried to soothe this week with a $12 billion USDA bailout package.

Companies like General Motors and other automakers, are making it clear that costs are rising as a result of tariffs. Meanwhile, business lobbies have sought to stop further tariffs, particularly on automobiles, which could have a wider, more significant impact on the economy and jobs.

Trump is clearly concerned about the economic pain from tariffs, and analysts say it is clear he needs a win on the trade front. As a result, they expect the U.S. may show more flexibility on NAFTA and with Europe.

The president, while standing with Juncker, also made a point of discussing how Europe has agreed to buy U.S. liquefied natural gas and soybeans, a crop that could be hit hard by tariffs already imposed by China. Trump also agreed to hold off on all tariffs on European goods for now: Those include autos, which was seen as one the most economically damaging proposals he has made for industry and consumers.

“I’m sure they’re also feeling a lot of pressure from the news that we had recently about the beef producers and the ag producers,” said Juan Carlos Hartasanchez, senior director at Albright Stonebridge, referring to reports of U.S. beef piling up in cold storage.

“When you have to put together a bailout package for your producers because of the impact of your trade negations had, I think that’s the moment when the administration steps back and thinks … ‘These things are having an effect on U.S. jobs and on the U.S. economy,'” he said. “

For them it’s also a way to say we’re making progress. We’re not only losing, we’re also winning,” Hartasanchez added.

But if the U.S. economy starts to suffer from the trade dispute with China, Strategas ‘ Clifton said that would motivate Trump to restart talks. In the case of China, it too might come to the table sooner, if it suddenly appears as though Republicans would make a strong showing in the November mid-terms, retaining both houses of Congress, he said.

The U.S. has so far slapped tariffs on $50 billion worth of Chinese products, and aluminum and steel. China has taken similar actions on U.S. goods. Tariffs on the first $34 billion of the $50 billion went into effect earlier this month by both countries, with the rest yet to be implemented.

However, there are bigger threats in the balance, with Trump proposing $200 billion more in an effort to get China to ease its position on U.S. intellectual property and tariffs.Clifton said that revamping the World Trade Organization (WTO) would be an important step that could resolve some U.S. concerns.

“The WTO reform is the essence of what Trump is trying to fix with China,” said Clifton. China is the world’s second-largest economy, but is considered a developing nation, a status that gives them more leeway to impose trade restrictions, the analyst explained.

“They’re allowed to have tariffs on average of 9 percent,” Clifton added, while a developed country would only be able to have tariffs in low single digits.

Separately, Trump has “gotten buy in from Europe that maybe the World Trade Organization needs to be reformed. … If we’re reforming the WTO, we’re doing it to make China play by a better system of rules,” he said.

Meanwhile, Canada on Friday said it plans to host a meeting of trade ministers to discuss how to reform the WTO, but it left the U.S. and China out of the meetings for now. A spokesman for Canadian trade minister Jim Carr said the meeting would take place in Ottawa in October, and invitees include Japan, the European Union, Mexico, South Korea, Australia, Brazil, Chile, Norway, New Zealand, Switzerland, Kenya and Singapore.

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