No one likes a trade war. It is essentially two powerful country raising taxes on its own citizens. But that doesn’t mean they’re not effective at getting things done. While many people understand that China has crossed the line, they also don’t like paying more for goods. It’s not good for anyone when the world’s top two strongest economies are butting heads.
The U.S. has taken steps to cut Chinese imports by as much as a quarter. That totals to around $35 billion so far. The move has also increased prices for American consumers. That’s a bad thing going into the 2019 holiday season. While the trade war has been going on for 16 months, there is some optimism a deal might be coming soon. Hopefully that’s just not wishful thinking.
“Overall, the results indicate that the United States tariffs on China are economically hurting both countries,” the report said. “United States losses are largely related to the higher prices for consumers, while China’s losses are related to significant export losses.” So, while both countries have lost money, it would appear the tariffs are doing what Trump wants them to do.
The Trade War and Its Impact
The industries hurt the most is Chinese manufacturing. They’ve been hit with $15 billion in losses. As Trump continued to increase the tariffs, the losses have been growing. As Chinese manufacturing was down, other countries really helped to fill the void. Specifically, Taiwan really won the most by taking in an additional $4.2 billion.
Mexico has also increased the amount of trade with the U.S. They hoped to reap some of the benefits and they have. The country has made an additional $3.5 billion from machinery and agriculture. For China, it’s looking more and more like those losses will be a permanent. They’ve been hit so hard their economy will struggle to recover.
“The longer the trade war goes on, the more likely these losses and gains will be permanent,” Nicita said. Not all of Chinese trade losses were picked up by other economies and billions of dollars in trade were lost entirely. This might be why China is now willing to come back to negotiations.
Make no mistake, China is a proud country. They won’t concede defeat, but hopefully the trade war will end very soon. If it goes on any longer, it could have disastrous implications for our economy.
