Priyanka everywhere in the world these days, except

Priyanka Gangwani

MGB – GF 003

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Globalisation has been the rising theme, a driving force everywhere in
the world these days, except of United States which is following a broad
protectionist agenda. Trade sanctions against China were a cornerstone
of Trump’s Presidential Campaign in 2016. China is the largest trading partner
with the United States with goods and services trade estimated to be worth
almost $579 billion in 2017. The American exports to China were worth almost
$116 billion and Chinese imports to America were worth almost $463 billion in
2017 (24% of the total US imports are from China). This has resulted in more
than 40% of the U.S. trade deficit due to China goods i.e. a trade
deficit of around $347 billion in 2017.

The Trump administration
undertook the first major step in curbing the imports of cheap products by
erecting trade barriers, the kind Trump often mentioned in his inauguration
speech. He promised to protect the borders of United States from other
countries. By levying tariffs, he aimed to protect the manufactures from
foreign competition and hoped that it will appreciate the dollar. This move was
included in his “America First” trade policy. He imposed steep tariffs on
imports of washing machine and solar energy cells and panels. The tariffs set on
solar panels are lower than what the domestic US players had expected,
but the tariffs set on washing
machines and parts are higher than predicted-adding as much as 50% in some
cases. Not only it could affect the global competition, but also have great
loss to the domestic workers and consumers.

The implications of trade tariffs on the American businesses and American
workers is not particularly encouraging. In the short run, there can be
difficulties in the domestic market as the impact of increasing tariffs will
ultimately increase the prices and hit the pocket books of the blue collar workers,
the very people who voted for President Trump. It will crush billions of
dollars of investment and slay tens of thousands of jobs all over the country
in many different industries. Also, on a broader perspective, for United States
to harvest additional renewable energy at the lowest possible cost and the best
overall technology, at present China is a leading producer (70% of the world’s solar
panels are made in China). The United States energy sector will take a hit as
renewable ways to produce energy will become much expensive than one might
conceive in terms of the overall price of important Chinese panels.

In the long run, it might bring some jobs back, but there is not much
evidence that it might bring the same ones back. The low skill manufacturing
jobs will shrink and will be replaced by higher technical skilled jobs to match
up to the Chinese technology and innovation. And United States can also move to
other third world countries looking for cheap labour.

United States used solar panels for
installations, amongst which more than 80% were imported from Asia. The trade tariffs imposed were not
directed specifically at China, but it will affect China the most as it is the largest producer
of solar panels in the world and it had also exported 21 million washing
machines worth almost $3 billion in 2017. Beijing was ‘strongly’ dissatisfied
with United States move adding that this decision may worsen the global trade environment
and also their foreign exchange reserves will take a hit. Such high trade tariff could trigger China to
execute retaliatory measures such as to impose its own tariffs on American
goods so as to hurt American companies. For example, America’s top exports to
China are their airplanes. Therefore, China may increase the tariffs on Boeing
airplanes and shift to European Airbus. That could lead to a trade war between
the two countries. Furthermore, China may move their cheap manufacturing to
places like Southeast Asia by dealing with countries having growing consumer
base, like India. Or it might also find loopholes where goods are manufactured
in China and shipped to another country, where they are officially exported to
the United States to avoid the tariffs.

To defend their interests, South Korea and China have hinted to lodge a
formal complaint with the World Trade Organisation (WTO) against United States,
claiming that it is putting their political antipathies ahead of the
international standards.

On the other hand, India after becoming China’s largest export market for
solar panels in 2017, is considering their own protections from oversees
supplies, if China decides to move their manufactured goods at lower prices, citing
threat to the domestic industry. Alternatively, India could gain from the
duties imposed by the United States government and the depreciation of the
Chinese Yuan by deciding not to impose its own tariffs. They can grab the
opportunity by taking an advantage of possible low prices by procuring cheap
solar production, as the suppliers seek new markets.

The United Arab Emirates market will boom as the United States move from
renewable sources of energy to the non-renewable ones. In retrospect, if United
States considers adoption of electric energy for their daily operations, the
dependency on non-renewable sources such as oil will decrease to a great
extent. The Gulf countries being a large exporter of oil may have to find
alternative ways to support their economy.

President Trump’s decision to impose high trade tariffs has a possibility
of a greater panic in the global financial markets and an economic mayhem along
the corridors of East Asia. Additionally, it will not only be affecting the
trade relations of America with the Chinese or to the Southeast Asian countries,
but also affect the trade relations with rest of the world. In a possible trade
war, China will have more to lose as they export more goods to United States
than United States exports to them. And generally in a trade war, the country
with trade surplus gets hit the hardest. China could lose millions of export
and manufacturing jobs. And at a time when there is an economic growth slowdown,
it could cause not only huge problems with their economy but it could lead to
political instability as well, and America in which case would benefit.

 

References

How U.S. Workers Would Lose in a Trade War With China https://www.youtube.com/watch?v=XgVAkxjGoJc

What would a U.S.-China trade war look like? | CNBC Explains

How U.S. Workers Would Lose in a Trade War With China https://www.youtube.com/watch?v=XgVAkxjGoJc

Kent Moors on the World Economic Forum and US tariffs on
solar imports https://www.youtube.com/watch?v=m8olZOP0VY0

Who Would Win a US-China Trade War? | China Uncensorí https://www.youtube.com/watch?v=7PS9BCfO4bs

South Korea slams US tariffs on solar panels and washers Hermes
– http://www.straitstimes.com/asia/east-asia/s-korea-slams-us-tariffs-on-solar-panels-and-washers

Trump’s Tariffs on Solar Mark Biggest Blow to Renewables Yet
Brian Eckhouse-Ari Natter-Chris Martin – https://www.bloomberg.com/news/articles/2018-01-22/trump-taxes-solar-imports-in-biggest-blow-to-clean-energy-yet

US slaps ‘America First’ tariffs on washing machines and
solar panels http://www.bbc.com/news/business-42784380

The Real Reason American Jobs Are Going to China Kimberly
Amadeo – https://www.thebalance.com/u-s-china-trade-deficit-causes-effects-and-solutions-3306277

China Has Plenty of Options to Retaliate Against U.S.
Tariffs https://www.bloomberg.com/news/articles/2018-01-23/china-has-targets-aplenty-to-retaliate-against-u-s-trade-action

Trump solar
tariffs reverberate in India, China’s biggest buyer http://economictimes.indiatimes.com/news/international/business/trump-solar-tariffs-reverberate-in-india-chinas-biggest-buyer/articleshow/62629178.cms

 

Bibliography

Here’s Who Could Lose the Most in a U.S.-China Trade War https://youtu.be/jAtFLkuWGZw

The People’s Republic of China U.S.- China Trade Facts https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china

America First (policy) https://en.wikipedia.org/wiki/America_First_(policy)

Washing machines are going to get more expensive The tax – http://money.cnn.com/2018/01/23/news/economy/washing-machines-trump-tariff/index.html

Fine print in Trump solar tariff holds some good news for
Tesla Nichola Groom; – https://www.reuters.com/article/us-usa-trade-tariffs-tesla/fine-print-in-trump-solar-tariff-holds-some-good-news-for-tesla-idUSKBN1FC37D