Daily Management Review

Hints Of US-China Trade War Being Dragged On Given By Trump


Hints Of US-China Trade War Being Dragged On Given By Trump
Following the latest escalation in the trade war between the United States and China with the announcement of Trump of imposing a fresh round of tariffs on Chinese goods and China alleging letting its currency fall freely to cushion the impact of the trade war, the biggest possible hint so far that he is willing to dig in for the long term with respect to the trade war was given by Trump.
Trump said that the US farmers would be provided support even in 2020 if they were further hit by the trade war pressure with China. It was just a couple of days ago that economists at Goldman Sachs predicted that the trade war will continue and no agreement on a trade deal will be reached between the two largest economies of the world until the US presidential election in November 2020.
In the latest series of tweets, Trump said: “As they have learned in the last two years, our great American Farmers know that China will not be able to hurt them in that their President has stood with them and done what no other president would do - And I’ll do it again next year if necessary!”
The waning of a possible solution to the trade war which has been going on for more than a year in recent weeks has rattled the global markets and clouded global economic growth.
The war of words between the US and China also escalated. On Tuesday, China accused the US of “deliberately destroying international order” through “unilateralism and protectionism” and its attitude was significantly detrimental for world economic growth. On the other hand on Modnay, Beijing was official identified by Washington as a currency manipulator.
China had intentionally devalued its currency “to gain unfair competitive advantage in international trade”, alleged Steven Mnuchin, the US treasury secretary. US will now approach the International Monetary Fund to ask the body to “eliminate the unfair competitive advantage created by China’s latest actions”.
On Monday, the biggest drop in 2019 was recorded by Wall Street amidst both the US and China showing no signs of blinking.
Predictions that the rather acrimonious trade war would continue deep into 2020 have been supported by analysts who say that it would the period that campaign to fight for the US presidential election would be initiated by Trump. US farmers have already been given aid worth billions of dollars by the Trump administration and according to analysts, this was crucial for Trump to keep the farmers as on his side as the US economy starts to feel the pinch of the trade war.
“While we had previously assumed that president Trump would see making a deal as more advantageous to his 2020 re-election prospects, we are now less confident that this is his view,” David Mericle and Jan Hatzius at Goldman Sachs said.
One of the 2016 presidential election campaign promises made by Trump was to designate China a currency manipulator. Those charges have however been vehemently denied by the People’s Bank of China.