The outgoing year was held under the banner of a trade war unleashed by U.S. President Donald trump. During the year it entered everything from neighbors and European allies to ideological rivals in Russia and China. The outcome of the confrontation dozens of affected countries and wasted billions of dollars, and established trade rules had radically reformed. However, major failures in competition still worried US that next spring they themselves can put an end to the war. The Chronicles of trade battles — the material “Tape.ru”.
The preconditions for a trade war was laid during the election campaign of Donald trump. He talked about the unreasonable position that Chinese goods is on the market. The evaluation of the then candidate, the bilateral trade deficit (excess of imports over exports) reached 500 billion dollars a year, because of what America has lost jobs and increased debt.
But even more, trump was infuriated by the theft of intellectual property of American corporations. According to Chinese law, foreigners can go to local market only through a joint venture with local players, which are easy to get access to their technology. So the U.S. is losing about 300 billion dollars a year, claimed trump.
In January 2018, his patience ended, and under the hot hand hit the manufacturers of solar panels and washing machines — they imposed increased duties: 30 and 20 percent, respectively. And hurt not only the Chinese, but at the same time and the South Koreans Mexicans who are recognized leaders the industry (in excess of the annual threshold of 1.2 million imported in the US washing machines duty automatically increases from 20 percent to 50 percent). Then in March it was the turn of metallurgists and their products: import tariffs on steel and aluminium has grown to 25 and 10 percent. “The steel and aluminium industry for dozens of years were destroyed due to unfair trade rules and the wrong policy in relations with the world,” explained trump.
Key allies of Washington (the EU countries, Australia, Canada, Japan) initially provided a respite, but in June her term expired, which triggered a response. The European Commission imposed a 25 percent duty on traditional American goods a total volume of 2.8 billion euros in the year: jeans, Bourbon, motorcycles, orange juice, peanut butter.
Economists rushed excitedly to compare the current situation with the great depression 30-ies of the last century. As its main causes also decided to allocate the protectionist measures adopted by the then US President Herbert Hoover. Duties affected more than 20 thousand products imported into the country. However, with the import suffered and the exports decreased three times: from 2.3 billion to $ 784 million annually. In the end, American industry experienced a serious downturn, spreading to the stock market (shares of companies fell behind on their revenue) and banks, where the majority of citizens kept their savings.
By the summer of 2018, it became clear that the fears were not in vain and hastily erected barriers really backfired for the United States itself. First, the output of production abroad has announced the legendary motorcycle manufacturer Harley-Davidson company decided not to transfer future costs to European buyers. Now its products will not be considered American, and therefore will not be subject to elevated charges. This was a serious blow for trump, who promised to force big business to bring jobs home. Brown-Forman, which owns the whiskey brand Jack Daniel’s, did not leave America, but warned of higher prices for Europeans by ten percent.
There were other victims: the electric car manufacturer Tesla, Monsanto fertilizer, sports goods, Nike, the supermarket chain Walmart. Went to Apple, most of the factories located in China, and Boeing, and the automotive industry (more than General Motors and Ford). Ironically, even Vivint Solar, specializing in solar panels, has remained in the red: was that to make their installation was more difficult because of the fallen offers. And the farmers of Illinois are digging their bunkers and come up with improvised devices for storage of soybeans, which can’t sell to China.
The trump running for President from the Republicans (in different years it was supported by Democrats, and even a little-known reform Party), actually went against his own party, traditionally in favour of free trade around the world. Many of them have their own business and move production abroad to save money on labor and resources, and therefore are interested in the duty-free movement of goods across borders. Thus, the head of the White house exacerbated the already serious contradictions in domestic policy, until then manifested during debates in Congress around tax reform or abolition of the existing health care system. Both times against initiatives trump were not only opponents-Democrats and some fellow Republicans.
The American President has repeatedly said that he wants to change the whole existing system of world trade, but received in response to accusations from financiers in the misunderstanding of its fundamental principles. The trade balance does not depend on the physical volume of exports and imports, and the size and needs of the national economy. Higher it is, the more goods and services requires its participants every day. Thanks to lower taxes and increase budget spending, domestic demand and the needs of American consumers will only increase, and their producers, contrary to the estimates of trump, can not meet them in full.
So no import to do still does not work, the question is, what kind of products and from which countries to import. In this sense, only one bilateral trade deficit with China, too little meaning. It can theoretically be reduced to zero but then have to buy from someone else, and, quite possibly, the same Chinese products, but imposed an additional charge and duties of third countries. Moreover, the deficit is not afraid of the United States, as long as they are Treasury bonds (the national debt) are considered the standard for reliability and attract the money to import.
But perhaps the most disappointing for trump, the fact is that by his actions, he never forced Beijing to abandon the policy of economic expansion. The Chinese authorities support the two main state programs: “one belt, One road” and “Made in China 2025”. The first aims at the creation of transport corridors for exporting goods to Europe, the second in support of its own high-tech production. So, until recently, before the business had the task to bring the share of domestic components in electronic products up to 70 percent. Both initiatives allocated tens of billions of dollars of budget and hundreds are attracted from private investors.
In the program “Made in China 2025” Washington sees the main threat to their current economic dominance. According to forecasts, in the coming years China could outpace the United States in terms of GDP, and the fact that you no longer will need American goods and will press them to Western markets. And to abandon ambitious plans in Beijing is still not going, despite the damage from duties — too much effort and funds already spent. In parallel, the leadership of the Communist party mobilizes the resources of their business — they gradually prohibit unreasonable to invest in foreign assets (although this process was launched even before the start of a trade war).
Besides, China has already found a replacement for American import in many areas. To do this, even in the summer were greatly reduced or even abolished restrictions on import of products from many countries, mostly Asian. So the authorities have secured themselves against possible deficit, and at the same time and found additional markets for their goods.
The situation escalated and threatened to take a long time, especially considering that it was beneficial to other countries. The EU has lured to his “foreign” suppliers and buyers, and even Russia has managed to sell in Europe remain without fuel from the U.S., record amounts of gas. American media wrote that trump is obsessed with China and wants to annoy him, come what may. It was also confirmed the new agreement with the neighbors: in the early fall of the United States, Mexico and Canada have entered into a new agreement the North American free trade area (NAFTA). It differs from the old only minor benefits for American farmers and manufacturers. Similar agreement providing for the abolition of most tariffs and may be signed with the EU.
The confrontation with Beijing, in contrast, only intensified: by the beginning of winter duties levied goods worth $ 200 billion, and with the new year they promised to increase from 10% to 25%. That all changed on Argentine G20 summit. Had both sides talking about a deal which can go for the truce. But in the event was held two-hour talks trump with the head of China XI Jinping, and they brought results. Si promised to “significantly” increase the purchase of agricultural and industrial products and lower tariffs on American cars from 40 to 15 percent. Also, the Chinese leader assured that he will fight the theft of technology and intellectual property. In response, the US President agreed to postpone payment: rates will increase to 25 percent from January and March and only in the case if countries do not sign a comprehensive agreement.
Later, trump said that he would agree only on “the real deal”. According to some, the main concession on the part of China was not officially announced — it concerns a programme “Made in China 2025”, which is going to significantly reduce. In particular, state funding will be reduced, and the deadlines postponed by ten years, to 2035.
But to calm down the White house yet. Economists point out that all the concessions from Beijing actually beneficial to him. So, buy the soy and the beans from it will be at lower prices, which fell after the introduction of retaliatory barriers. The American auto industry during the confrontation managed to lose the leading position in the Chinese market — so now they’re in German and Japanese cars. The U.S. companies will find it difficult to access relief, because for the year greatly increased the cost of production — all due to the increased cost of foreign metal.
Finally, to talk about the downside of “Made in China 2025” wrong. It podkorrektirovatj, but the situation requires in the domestic economy: in recent months there has been a slight decline. The first thing the authorities will revise the budget expenditures, refusing to support inefficient projects.
If the parties will keep their promises, a trade war may end in the spring, so nothing really did not change. World trade will get a new impetus to development — many countries, seeing the futility of the restrictions, I will try to continue to do without them. But while full of confidence in this. In early December in Canada, on demand of the USA have arrested the financial Director of Huawei — one of the world’s largest manufacturers of smartphones and telecommunications equipment. Man, Banjo accused of collaboration with Iran to bypass U.S. sanctions — imposed them, when America withdrew from the nuclear deal with Tehran. In particular, companies doing business in the United States, it is forbidden to have contact with Iranian partners.
Washington is struggling with Huawei for several months — Huawei products can not be purchased governmental and military agencies because of the suspicion in the leak of user data. However, she is a world leader in the development of data transmission technology 5G, even the White house recognizes that it will not catch up to China without her. While the man was released on bail the next few months it will have to wait for the court, and at the same time and the outcome of negotiations between Beijing and Washington. It a person can become a bargaining chip in the future of the world economy.
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