Patron: Her Excellency The Right Honourable Dame Patsy Reddy, GNZM, QSO, Governor-General of New Zealand

Escalating Trade War Between China and the US 

By Dr Anita Perkins

As the US moves closer to mid-term elections, to be held on 6 November, both domestic and international commentators are keeping a close watch on the US economy, and on the Trump administration’s increasing trade war with China. Since the start of this year both countries have introduced tariffs on trade with the other.

Below we outline some of the latest media reports on developments between Washington and Beijing. These articles cover concerns about a recession by 2020, about the weakening of the yuan, and about the US’s move to pull out of the Universal Postal Union.

CNN Business: Trade war with China could lead to recession sooner rather than later

Ronald Temple, head of US equity for Lazard Asset Management, predicts that with rising interest rates, the Trump administration’s trade policies with China mean that the likelihood of a recession by 2020 is increasing. Temple’s views are that China has a lot more options in terms of trade than it used to, and the US administration has done itself a disservice by not being more unified with other countries. The result, according to the report, is a fragmented coalition rather than a unified one, which is a missed opportunity for the US in terms of its potential global negotiating dynamics.

Washington Post: China’s weak currency is helping it in the trade war — but Beijing doesn’t want it to fall further

Economists report that the only thing Washington and Beijing agree on in terms of the trade war is that they don’t want the yuan to depreciate. At the same time, it is reported that Trump accuses Beijing of keeping exports cheaper by trying to keep its currency artificially weak.

Fortune: Trump’s Latest Salvo in His Trade War With China? Pulling Out of a 144-Year-Old Postal Pact

This report covers Trump’s decision for the US to exit the Universal Postal Union as part of fighting the US-China trade deficit and in line with his general trend of withdrawing from multilateral agreements. Discounted shipping rates for postage from China were part of the Union’s aim to boost flagging economies. With the Chinese rates about a quarter of the US, the administration wants to negotiate better rates for the US. The US processes about half of all global mail and is thus in a good negotiating position to have better rates or to leave the agreement.