US keeps cutting large checks to China, Japan and Germany

It would, therefore, seem reasonable to temper a sudden enthusiasm that Trump and Chinese President Xi Jinping will solve the trade issue during the G-20 meeting in Buenos Aires, Argentina, that starts Nov. 30. There are a number of things to consider.

First, China is not in a hurry and is unlikely to rush into a trade deal. Beijing apparently believes that it can handle tariff walls and exact an unacceptably high political and economic price for Trump by hurting, among others, his farming constituency.

Second, trade issues raised by Washington have hit some of China’s systemic red lines in the area of economic and financial management. That was a deal breaker last spring. Washington still insists on those “reforms,” but Beijing is unlikely to yield.

Third, Trump probably had a chance to reach an interim, practical trade deal while he claimed to have established a friendly relationship with Xi. That deal could have stopped and reversed the upward trend in U.S. trade deficits with China, in expectation of structural changes to reach a sustainable position of balanced bilateral trade flows.

But that opportunity seems to have been lost. An ever-elusive U.S.-China mutual trust is in short supply, if any exists . The relations have veered back to confrontation on a broad range of issues, setting up an inauspicious framework for trade talks. Indeed, the summit cannot skirt problems of (a) arm sales and “official” contacts with Taiwan, (b) clashes around China’s contested air and maritime borders in East and South China Seas, (c) a contentious Korean peace process, (d) competition vs. win-win cooperation quandaries, etc.

Trump was right to start out with Canada and Mexico trade problems. He had leverage and used it reasonably well. His next, or simultaneous, move should have been to do the same thing with Germany and Japan. The chances of success in rearranging trade relations with those two close allies were high.

With those three trade agreements under his belt, Trump would have put China in a difficult negotiating position. And a clear path to the U.S.-China trade deal would have been set.

But that’s now water under the bridge, and a real puzzle why Trump did not do the easy things first.

The irony is that there may no longer be “easy” trade solutions with Germany and Japan. Emboldened by Washington’s problems with China, Tokyo and Berlin could now be much tougher customers.

Source : CNBC

Related posts

US, China launch trade talks to avert tariff war, economic damage


Scotland's police forking out more in compensation payments


Political Uncertainty Weighs on Global Growth


Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.