By Tani Fukui and David Richter
View from the United States
Our view is that the current strong U.S. economy means there is some leeway for dealing with trade policy uncertainty. Recent robust U.S. growth and relatively stable U.S. financial markets provide space for U.S. policy makers to “take some pain” as they pressure China for concessions. In a weaker economy, the impacts of a trade war would be more difficult to absorb and elicit more broad-based concern and political resistance.
View from China
The U.S. imports significantly more than China, giving the U.S. an advantage on the goods tariff dispute. China will thus be forced to retaliate using non-tariff or “qualitative measures” aimed at U.S. multinational corporation operations in China (with nearly $500 billion in annual sales) such as customs delays, tax audits, more regulatory scrutiny, or the inability to win contracts.
For the full report, please download the file:
U.S.–China Trade Update (PDF | 68.69 KB)
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