The ongoing tariff talks by the U.S. have been constantly making headlines. Especially those as well between the U.S. and China. In a nutshell basically, governments tend to impose tariffs as a method to raise revenue, protect domestic industries or otherwise to exert some political leverage over another country. A negative aspect of this is that it may lead to higher consumer prices. The whole debate surrounding this matter has been ongoing for a while.
The U.S. coming back to the table
Top U.S. and Chinese economic officials will resume talks in Stockholm on Monday to try to tackle longstanding economic disputes at the center of a trade war between the world’s top two economies, aiming to extend a truce by three months and keeping sharply higher tariffs at bay.
China is facing an August 12 deadline to reach a durable tariff agreement with President Donald Trump’s administration, after Beijing and Washington reached preliminary deals in May and June to end weeks of escalating tit-for-tat tariffs and a cut-off of rare earth minerals. The Stockholm talks come hot on the heels of Trump’s biggest trade deal yet with the European Union on Sunday for a 15% tariff on most EU goods exports to the U.S., including autos.
The bloc will also buy $750 billion worth of American energy and make $600 billion worth of U.S. investments in coming years. No similar breakthrough is expected in the U.S.-China talks but trade analysts said that another 90-day extension of a tariff and export control truce struck in mid-May was likely. An extension of that length would prevent further escalation and facilitate planning for a potential meeting between Trump and Chinese President Xi Jinping in late October or early November.
Evaluating China’s landscape
A U.S. Treasury spokesperson declined comment on a South China Morning Post report quoting unnamed sources as saying the two sides would refrain from introducing new tariffs or other steps that could escalate the trade war for another 90 days. Trump’s administration is poised to impose new sectoral tariffs that will impact China within weeks, including on semiconductors, pharmaceuticals, ship-to-shore cranes and other products. So far, the talks have not delved into broader economic issues.
They include U.S. complaints that China’s state-led, export-driven model is flooding world markets with cheap goods, and Beijing’s complaints that U.S. national security export controls on tech goods seek to stunt Chinese growth.
“Geneva and London were really just about trying to get the relationship back on track so that they could, at some point, actually negotiate about the issues which animate the disagreement between the countries in the first place,” said Scott Kennedy, a China economics expert at the Center for Strategic and International Studies in Washington. American think tank, Center for Strategic and International Studies, is based in Washington DC.
The impact of these types of talks
The purpose of this center is to conduct policy studies as well as strategic analysis of economic, security as well as political issues across the world. The deeper focus then being international relations, technology, etc. Sun Chenghao, a fellow at Tsinghua University’s Center for International Security and Strategy in Beijing, said that a Trump-Xi summit would be an opportunity for the U.S. to lower the 20% tariffs on Chinese goods related to fentanyl.
In exchange, he said the Chinese side could make good on its 2020 pledge to increase purchases of U.S. farm products and other goods. Fentanyl itself is a highly potent synthetic piperidine opioid. It is primarily used as an analgesic (pain medication). Its potency is 30 to 50 times more than heroin and a further 50 to 100 times more potent than morphine.
Tariff issues can also have some negative side effects. For one thing, with the reduction in competition, it can make the domestic industry less innovative and efficient. Higher product prices can hurt domestic consumers as there is an overall lack in competition. Further tensions can evolve due to favoritism towards specific geographic regions or industries. If matters escalate badly, a trade war can be the end result.
GCN.com/REUTERS.