The
world has started to 2018 with a huge economic turmoil. In early March, President
Trump signed the circular about the new tariffs on steel and aluminum imports. Everybody
knew that actually this was the precaution to China-U.S. trade.
And
China made the expected move yesterday. China Ministry of Finance has announced
that China imposes tariffs on 128 items of imports from the U.S. including pork
and fruit products starting Monday as a countermeasure in response to a
previous U.S. move to slap tariffs on steel and aluminum imports. This was a
big step from China.
Lets
take the issue from the beginning. Why did Trump want to crack down about China
and U.S. trade?
In
2016, Trump has accused China to steal U.S. intellectual property and abuse
trade rules and he said that this situation allowed 6 million workforce loss in
U.S during his president campaign.
In
his first year, he signed new tariffs on steel and aluminum. But Trump didnot
want to stop. In the second period of March, he took additional steps toward
imposing tariffs on 60 billion dollars in Chinese goods and set the cat among
the pigeons. Just a few days later, China took an action and they announced
imposes new tariffs on 128 U.S. goods.
Lets
look at the trading volume in between these countries:
In
2016, the U.S. imported 481$ billion in goods from China. The annual growth is
3% between 2012-2016. And China’s share was %21 in U.S of America’s total imports.
In
return to this, in the same year, the U.S. exported 115$ billion to China. The
annual growth is 0% between 2012-2016.China’s percentage share was just %8 in
U.S of America’s exports.
Because
of this big difference, Trump believes that this trade volume should be
balanced.
l
donot know who wins this war. But l think China can find other buyers. For
example, in recent years, Chinese firms take new projects in Africa, especially
in construction and underground structure. They are aware of that Africa is a
huge and untouched continent. You will understand clearly with a real example
volume what l mean:
In
China’s exports to Algeria; tubes,pipes and hollow profiles, of iron or steel’s
annual growth in value between 2012-2016 was 39%; structures and parts of
structures’ annual growth in value between 2012-2016 was 66%.
Yes,
China can find other buyers, but what about U.S.! The Chinese population is 1,4
billion approximately. Could agriculture companies located in U.S. take the
risk to lose this population? As an example, last year U.S. agriculture firms
exported 1.1$ billion in pork to China.
If
China stop the purchasing from U.S., are China and Europe getting closer? And also
with South America? Its really possible. Last week, Trump threatened to
withdraw from the North American Free Trade Agreement (NAFTA) if Mexico doesn’t
do more to stop immigrants from entering
the U.S.
As
far as we see, Trump took actions what he said before. But he did these with an
animus feeling.Do you think that Trump’s behavior to other countries will
isolate the United States of America from the other countries? Where will go
this trade war? We will see in the future but not too long.
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