The
US business group is pressuring Washington to reopen the trade talk
with China and end the ongoing trade war; over 600 companies including
Walmart sent a letter to the US president to ask for an end of the trade
war with China. China and the US are putting tariffs on each other's
goods; meanwhile, India is also placing tariffs on US imports, mainly
agricultural and chemical goods, and escalating its trade tension with
the US. At the moment, the US wants to achieve three goals by its trade
war with China. The first goal is to reduce the US trade deficit with
China, the second goal is to keep its economic and political dominance,
and the last goal is to take a lead in the 5G though China is already
leading the 5G.
However,
the trade war also brings an economic pain for the US economy and the
US population. The human cost in the US is much higher than the human
cost in China; therefore, even after the tariffs, the Chinese products
may still have lower prices than the US products. Under such
circumstance, for many US households, they are still buying the same
products but with higher prices. Furthermore, it may also hurt the US
product sales as well. Nowadays, people have to admit that it is almost
impossible to avoid Chinese products. So a fraction of people's incomes
will be allocated to the Chinese products which they cannot avoid
(meaning they cannot find a US alternative to this Chinese product),
when the Chinese product prices increase, this fraction will increase,
and the fraction which is spent on the alternative products to Chinese
products will reduce, this can force people to look for cheaper imported
goods (maybe not necessarily Chinese imports) and reduce their
consumption on US products. Of course, we cannot ignore that price
increase will lead to a general reduction on consumption and US
companies also lose orders from Chinese companies. Therefore, a trade
war with China is not good for consumers as well as US companies.
The
US president is asking for another talk with the Chinese president at
the coming G20 summit; however, China has not released its response yet.
China, of course, wants to resolve the trade war; however, it does not
mean China will do whatever the US requests. At the moment, both sides
want to reopen the trade talk, but the main disagreement still remains
and I do not think either side want to make itself seem weak. Therefore,
the possibility of reopening the trade talk is still clouded.
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