The trade negotiation

The trade negotiation has been clouded by the US president Trump's tweets and the rising uncertainty about the negotiation has dragged the global stock market down. Trump personally wants to increase the tariffs on Chinese imports and reduce the US trade deficits by lowering its imports; on the other hand, the Chinese government knows the US demand is to lower its trade deficits with China, and seeks a different way that can reduce the costs for China but is able to achieve the same goal, China wants to purchase more US goods and services, especially many agricultural products including soya beans and some high tech equipment which the US does not want to include as part of the trade deal.

The US way will have a greater negative impact on the Chinese economy, as the industries which rely on exporting to the US will be deeply affected. However, if China and the US choose to narrow the trade gap by China purchasing more US goods, the Chinese companies will continue to export their goods and the US economy will be benefited by more exports to China at least in the short term. Therefore, if China withdraws its previous agreement about purchasing more US agricultural products because the US wants to increase the tariffs, then the US agricultural industry will be affected and at least miss a huge opportunity.

Of course, the US idea has its own reason. Increasing the tariffs can increase the competitiveness of its industries in general domestically, instead of only several specific industries.