Japan Embraces Bilateral Trade Talks with U.S.

Japan Embraces Bilateral Trade Talks with U.S. 

On September 26, the Japanese Prime Minister, Shinzo Abe, agreed to enter bilateral trade talks with President Trump after over two years of rejecting any offers for trade negotiations. The dispute between American and Japanese trading enterprises began after President Trump withdrew from the Trans-Pacific Partnership, which set trading precedents through a multi-lateral trade agreement between roughly a dozen nations. Many Japanese politicians feel as though they have been "chased into a corner" by President Trump's demands in regards to the potential threat of a 20-percent tariff on vehicles exported by Japan. However, most analysts believe that the new trade arrangements will be less extensive than planned, with the main purpose being to increase the amounts of agricultural products and military hardware exported to Japan. 

My Analysis

I personally believe that reentering an agreement such as the Trans-Pacific Partnership or using bilateral trading agreements under adjusted terms would greatly benefit the United States by increasing our terms of trade. Making alterations to our trading agreements will also benefit the partner nations as well by maintaining or increasing the amount of American products within foreign markets and the world market. An increase in the amount of products available to consumers would allow both foreign and domestic markets to reach higher, more extensive indifference curves, thus increasing overall satisfaction. Lastly, rejoining or making new trading agreements would support the profitability and sustain the exports of our foreign trading partners, thus allowing them to remain constant on their production frontier, one such example is the Japanese auto industry, which would export 200,000 fewer automobiles and experience a 2.2 percent decline in profitability if the United States imposed the 20-percent tariff. Renegotiating and reentering trading partnerships would greatly benefit both the U.S. and foreign nations: increasing U.S. terms of trade, increasing American exports and the variety of products on world markets, and stabilizing foreign industries are several effects of the new U.S. trading policy that will allow partnering nations to prosper. 

Trade War Between China and US

Regarding the terms of trade that we were discussing in class, the United States and China are not on good terms. In the articles "Trump threatens new tariffs on $267 billion of Chinese goods" and "China 'will retaliate' if the US imposes new tariffs on $200 billion of goods" from TheGuradian.com, there are talks that the terms of trade will be going down. In the first article, Trump plans on putting a tariff on $200 billion worth of Chinese goods imported to the US but can impose it to be worth $267 billion with a further package. With China having a trade surplus of over $31 billion as of August, Trump says he wants Beijing to make changes in economic trade and and technology policy. With this in mind, the terms of trade aren't equal between the US and China. With China at a big surplus and the US at a large deficit, there needs to be a compromise. Trump trying to impose a tariff on the imports might work for a little while, but in the end, it will hurt their trade relations along with hurting the global economy. With the second article, China will respond with retaliatory tariffs as well. However, they do share information that the trade gap between imports and exports rose from $4 billion to over $50 billion in July and China also imported $129 billion in goods from the US while exporting nearly quadruple the amount they exported to the US which was $500 billion. 

Now with the information that's given, I feel that there needs to be a change between the US and China because China accepts the US's imports but not willing to accept more while the US is buying more of China's exports but China isn't purchasing more of the US's imports. I do agree that there should be a tariff on the goods however, the tariff should be within a reasonable margin for the US to make up for some of the trade gap. The US has been dealing with this for a long time and have lost money for over 10 years to China and I feel that they need to work something out. The number that was thrown out by Trump was 25% on $50 billion worth of goods imported to the exported to the US. To me, that seems a bit steep and should go down to about 10% to start and see where it goes from there.

Sources: https://www.theguardian.com/technology/2018/sep/08/donald-trump-threatens-267bn-more-tariffs-on-chinese-goods

https://www.theguardian.com/business/2018/sep/06/china-retaliate-us-trump-imposes-new-tariffs-200bn-goods