Thursday, January 3, 2019

The trade war between US and China



As of 1/2019, I predict the trade war would be ended in April or before. Trump-made problem would be fixed and Trump would declare victory. Trump cares about his election in less than 2 years and Xi’s 10-year term has plenty of years left. A full-fledged trade war could not be good for both countries and the rest of the global economies.

I expect the forced transfer of technologies will be eliminated. It is an unfair bait for gaining the Chinese market. We have to blame the U.S. CEOs signing these agreements for their bonus consideration. So far, both sides have lost a combined total of 6 billion. Many long-term harms have been done to the U.S. Here is a summary of the actions and counter-actions from China.


U.S.
China
Tariff
Will not gain a lot of jobs as other countries and robots would fill the gap.

Will pass tariffs to the consumers.

Will have less profits.

Will lose the market to some countries.
Barriers
Would open the market to more US products.
Patriotism would discourage citizens to buy US products.
Unfair rules
This is a bright spot for US.
Could have more impact 5 years ago.  China depends less on foreign technologies than before.
Internal market
Will be reduced.
Will be expanded.
Treasury
Interest rate will be higher.
Reduce owning US Treasury.
Depreciation of the Yuan
Harmful for export goods to China.
Make Chinese products more competitive.
Core technologies
Will lose these sectors to China eventually.

Intel, Micron… have suffered already.
China will concentrate research on CPU and memory.

China may limit rare earth export to US.
US allies
Eventually they will be sided with China due to economic reasons.
Eventually will gain more.
US Corporation
Many will suffer such as Apple.

Less FDI.
Soy
A direct blow.
Will switch to other countries at higher prices.
Soy will be reduced in the mix for feed.
Education & tourism
Will be decreased from China.
More universities and more tourists to Europe.



 






































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