New York [US], April 19: There is no clear indication of de-escalation, but the ongoing trade war between the United States and China could cost both countries dearly.
Yesterday (April 18), AFP quoted US President Donald Trump as telling reporters at the White House that the country was negotiating with China over the trade disagreement between the two sides. But President Trump was cautious when asked about the possibility of him discussing directly with Chinese President Xi Jinping. "I have never said whether there will be a face-to-face discussion," Trump said.
In addition, the US President on April 17 admitted that the escalation of the "-for-tat tat" tariff increase between the two sides is not going anywhere, because the current tariff makes it impossible for the two sides to trade with each other.
Risks for China
According to the South China Morning Post, at a meeting of China's State Council on April 17, Premier Li Qiang called on officials to promote positive expectations to "form a strong synergy in society to deal with risks and challenges."
In fact, after being imposed by the White House, many Chinese businesses have been canceled by their partners. Bloomberg quoted the business director of a shipping company in China as estimating that about 70 percent of its shipments to the United States were canceled or halted after Trump imposed tariffs on more than 100 percent of Chinese goods . The shipping company even had to turn some ships around even though they had left the port, because the US canceled the order. Some Chinese companies have had to cut staff and reduce production activities. Many small and medium-sized enterprises have suffered serious losses. Typically, a company that manufactures home appliances and warm mattress mats with a monthly revenue of about $14 million has fallen to zero because it is almost completely dependent on the US market. Meanwhile, this business has sought to expand the market to Europe but the efficiency is not high.
On Chinese social networks, there have been many movements calling for the "rescue" of inventory goods because they cannot be exported. Some e-commerce platforms also launch packages to support inventory sales. However, even before the trade war escalated, consumption in China had declined due to spending restrictions due to concerns about economic difficulties, despite the government's many stimulus packages.
Many foreign companies that are manufacturing in China have to find ways to change their supply chains. For example, Forno Company (Canada), which specializes in supplying household kitchen goods, exported 6,000 containers of goods from China to North America last year, but is now shifting production activities to North America.
Recently, China has devalued the yuan at 7.5% to reduce the price of exports. However, this devaluation level is not enough to compensate for the excessively high tariff rates imposed by the United States. On the contrary, the devaluation of the yuan causes goods imported into China to increase in price higher, and at the same time leads to the trend of selling the yuan to buy foreign currency.
It's difficult for the U.S.
Of course, the United States also faces significant difficulties from the trade war, especially when it also raises tariffs on goods from most other countries. Many American businesses are struggling because of the disruption of supplies of goods from China .
President Trump on April 17 again criticized US Federal Reserve (Fed) Chairman Jerome Powell for allegedly "playing politics" when not cutting the operating rate. President Trump even threatened to remove Mr. Powell.
On the contrary, the Fed Chairman has maintained his concern about high inflation, which is caused by President Trump's tax policy. Not long ago, Mr. Powell affirmed that the Fed must be responsible for curbing inflation. According to him, the current economic context of the US is uncertain, so the White House's increase in import tariffs may cause commodity prices to rise, causing inflation to rise again.
Recently, Mr. Christopher Waller, a member of the Fed's Board of Governors, also made some comments on the US economic situation. Specifically, he worried that if the Trump administration pushes tariffs higher, US economic growth "may slow down and significantly increase the unemployment rate". Specifically, inflation could rise to about 4% this year, while the unemployment rate could reach 5%, significantly higher than the current 4.2%.
According to data released by the New York Fed on April 14, US consumers may face higher inflation and unemployment rates next year. Specifically, in the next 5 years, inflation will be at 3% per year.
The developments just mentioned have caused the US economy to face significant pressure, even being thought to be able to fall into a recession.
Therefore, the current US-China trade war is also a reagent for the endurance of both sides.
Source: Thanh Nien Newspaper