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
I personally believe that we need to lower our trade deficit, however, I believe that President Trump and President Xi of China should work bilaterally to resolve our trading differences. Finding a peaceful, mutually-supported solution could bring out nations closer to a balanced trading structure: stabilized consumer prices, increased consumer utility, and increased real income for both the U.S. and China could be consequences of an agreement that could balance both nation's terms of trade. However, China has much lower wages and costs of labor in production, so we must have some tariffs and other deterrents in order to preserve domestic wages and jobs. I propose implementing smaller tariffs and import quotas that will accumulate taxes up to the extent of the quota, which will allow for more trading freedom, while discouraging dumping into our domestic markets. In my opinion, I do believe a 10% tariff such as the one you proposed could be a common starting point in trade discussions between our nations.
ReplyDeleteI agree with Gradin to an extent, Both Presidents have to work together as its in both of their best interests to maintain high levels of trade between the countries to keep the products split to help to keep meeting the demand level, which wouldn't fluctuate the price. This would therefore keep the consumers happier overall. I understand where Trump is coming from with the Tarrifs though as he would like to bring the production of products back to the US. But, in my opinion in most cases its not feasible, because the production costs are significantly cheaper in Asia, which makes them so much easier and cheaper to import. The tariffs are put in place to try to deter people from importing goods that could easily be produced in the US only at a higher cost.
ReplyDeleteI agree with Gradin. The trade deficit is something that the US needs to work on lowering, in order to bring more jobs to the country. Though, like Gradin says, I believe that President Trump and President Xi need to work together to come to an agreement that both countries can be happy with because while we need to lower the trade deficit it is still important for the US and China to have a good relationship. If President Trump goes forward with his tariff threat, China, as it said in the article, will retaliate, which could hurt trade all together, and not help to lower the trade deficit at all.
ReplyDeleteI do agree that a tariff on China's imports are one solution to this issue. If we want to be less aggressive with China, a solution for the US would be to produce exports more competitive with their market, making them either less expense or higher in quality. In reality, this solution is much harder and the previous solution would be much easier and common. Of course, there could be a more political purpose as to why China does not buy US goods, thus, rendering the second solution useless.
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