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Monday, July 15, 2024

Global Economy suffers as Trump’s Trade war continues

News Analysis |

The farmers in the United States are facing a hard situation as to where to put the piles of harvested grain which was usually exported to China. The storage capacities are shrinking and the yield has started to rot as no one is ready to buy the harvested crop because of the lack of demand.

Across the United States, grain farmers are plowing under crops, leaving them to rot or piling them on the ground, in hopes of better prices next year. It’s one of the results of a U.S. trade war with China that has sharply hurt export demand and swamped storage facilities with excess grain.

The storage capacity of the U.S produced grain which was already under strain increased the problem multiple folds after the trade war. Even before this fall’s harvest, around 20 percent of total grain storage available in the U.S. was full of corn, soybeans, and wheat from previous harvests, according to the U.S. Department of Agriculture. That was the highest in 12 years for this time of year.

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President Donald Trump came into power with the slogan of putting “America First”, the intention of safeguarding the interest of U.S citizens and the state in general against the rigged international trade system which is negatively affecting America.

The United States of America slapped 25 percent tariff on the Chinese imported goods which mount up to $250 billion in overall worth. Not only the economic and strategic rival China was the target, but U.S long-term partners Canada and Europe also fell under the radar of the U.S tariff on aluminum and steel.

The move on part of the U.S was extremely calculated which targeted the goods which have a high price elasticity. In layman’s terms, the Trump administration imposed the high tariffs on the goods which have a local manufacturing as well.

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Thus benefiting the local industry and cutting the trade deficit with China by as much as 17%. As per a recently published research, the increased tariffs are designed in a way that the U.S consumer share a minimal, around 4-5% of the increased tariffs and the rest would fall on the Chinese producers.

China in response announced the retaliatory tariffs on the U.S goods, mostly relevant to the agriculture sector such as wheat, textiles and soya bean.

Beijing’s plans for tariffs on $60 billion of U.S. goods includes an additional 5 percent duty on about 1,600 kinds of U.S. products including smaller aircraft, computers and textiles and an extra 10 percent on more than 3,500 items including chemicals, meat, wheat, wine and LNG.

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Apparently Donald Trump and his aides anticipated and calculated the response which the enacted tariffs would bring, therefore a $12 billion assistance package was announced for the farmers whose crop would be affected.

So far the trade war is hurting all sides within different intensity or proportion of shared loss. Since it is China who enjoyed a huge trade surplus with Beijing before the tariff tussle started, it is increasingly making efforts to support its industrial economy.

Liu He, President Xi Jinping’s right-hand man in charge of economic policy and China’s top trade negotiator, will visit Germany from Sunday to Wednesday for the Hamburg Summit of China-Europe Forum.

Liu will meet Germany’s Vice-Chancellor and Finance Minister Olaf Scholz, the Chinese foreign ministry said. His three-day trip takes place days before an expected face-to-face talk between Xi and his US counterpart Donald Trump at the G20 summit in Argentina on December 1.

Germany likely to be hit hard if the US put tariffs on auto exports and, like China, has a trade surplus with the US – but it shares some US concerns on China.

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There is hope for a breakthrough in finding a midway as officials from China and the United States are preparing for Xi and Trump to meet. But for now, suffering continues are multiple sides as Canada is also struggling after the imposed tariffs on its aluminum.