Sun, February 05, 2023

Economy: Last-minute agreement may save the situation

U.S. and trade dispute

People from all over the world have at least some knowledge about the trade war between China and the U.S. The dispute started in 2018. However, the trade war is not over yet due to various reasons. The global economy is slowing down, and, in this situation, the unresolved trade war between the largest economies is a serious problem.

In several days more precisely, from December 15, the U.S. may impose additional tariffs on about $160 billion in Chinese exports. The 15% tariffs will cause additional problems for the companies as well as individuals.

However, there is a chance that the last-minute announcement may save the situation. As a reminder, the U.S. and China reached an agreement in October. However, the leaders of the U.S. and China have to sign the “phase one” trade deal.

In October, President Donald Trump stated that the initial trade deal would be completed before the end of 2019. He also noted that the trade deal would address issues such as intellectual property and financial services. Also, as part of the del China had to purchase agricultural products from the U.S.

Moreover, the U.S, as well as China, are trying to save the “phase one” deal. Negotiators from both countries are working to find a solution regarding the additional tariffs. However, it is not clear for how long the U.S. will postpone these tariffs. As a reminder, this round of tariffs will affect Chinese-made toys, phones, laptops, and clothes.

The Office of the U.S. Trade Representative did not immediately respond to this news. Also, a White House spokesman declined to comment.

The future of the agreementLast-minute trade agreement

Several analysts commented on this issue. Kenny Polcari from the Slatestone Wealth made stated that a last-minute announcement regarding a trade deal on Sunday will save the situation.

According to Polcari, both sides will emphasize the importance of the trade deal. Moreover, they will announce that to increase the chance of this agreement; they won’t impose tariffs.

Eric Robertson is the global head of foreign exchange, rates, and credit research at Standard Chartered Bank. Robertson believes that markets are already anticipating that the U.S. and China will reach some form of an initial deal.

Moreover, if the U.S. and China fail to find a solution before December 15, there is another option on how to deal with this problem. For example, the U.S. and China may announce they won’t collect any revenue from the tariffs imposed on December 15th for the next six months.

It is just one of the examples of how the two largest economies in the world may solve the problems caused by the new round of tariffs.

Also, it is important to remember that Donald Trump is running for reelection. He needs to deal with the trade war. Otherwise, it will be harder to convince rural voters to vote for him. Farmers across the U.S. suffered due to the tariffs imposed by China. He has less than one year to reach an agreement which will be acceptable for both sides.



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