Economists at Chinese think-tank predict American consumers to feel trade war effects by year’s end

The U.S. trade deficit with China is up for a second straight month and one group of Chinese economists predicts the ongoing trade friction between the two countries will continue to intensify.

Citing the numerous U.S. businesses that manufacture products in China, economists at the China Center for International Economic Exchanges proposed this week that American consumers may begin to feel the effects of retaliatory tariffs by the end of the year.

Founded in 2009, the CCIEE provides international economic research and exchanges of business and industry leaders in both countries.

Members of the China Center for International Economic Exchanges pictured with American journalists after their discussion of U.S./China trade relations. (Photo source: Better Hong Kong Foundation)

A team of economists and researchers are closely monitoring the impact of tariffs supported by U.S. President Donald Trump, who has pledged to address imbalances with U.S. trade partners by renegotiating agreements and increasing tariffs on foreign exports.

Last week, the president announced he was considering another round of tariffs on more than $200 billion worth of Chinese products.

CCIEE researcher Xu Changchun says this action against the world’s largest exporter may also have an effect on the global supply chain by increasing costs for other countries.

CCIEE researcher Xu Changchun and CCIEE director Chen Wenling discuss the lead-up to the current trade war. (Photo source: Better Hong Kong Foundation)

In 2017, the largest segment of China’s $2.157 trillion in exports included electrical and other machinery, including computers and telecommunications equipment, apparel, furniture, and textiles, according to U.S. figures.

Through an interpreter, Xu described the two countries’ interdependence as ‘brotherly,’ saying, “When we get along, we can go make money together. When one hurts, both feel it.”

China’s sheer size does provide some leverage in the current economic standoff. With a population of 1.39 billion people, it serves as a vast market for U.S. products, like electronics products, computer components, oil and fuels, medical equipment, automobiles, and soybeans.

“Nowhere in the works can [the U.S.] find such a large substitute market,” Xu said.

CCIEE economists told American journalists U.S. consumers may feel the effects of the tariff hikes by the end of 2018. (Photo source: Better Hong Kong Foundation)

China’s leaders, businesses and people want the trade war to end in a win-win situation, according to CCIEE chief economist Chen Wenlin. However, she said tensions may inadvertently benefit Chinese businesses by forcing them to become more independent of foreign influence.

The Chinese government gave an indication this would become a priority well before the trade tensions with the U.S. began. In 2016, China released its latest five-year plan, which called for a boost in domestic consumption to make the economy less dependent on government subsidies.

Chen said the faster the trade war escalates, the faster the rebound effects will become visible. End the end, she said she believes her country’s leaders, businesses, and people want their relationship with the U.S. to develop in a positive manner.

Lane Luckie, a news anchor and reporter for KLTV in Tyler, Texas, is traveling to Asia to explore the current issues related to the important bilateral relationship between the world’s two largest economies, the United States and China. Click here to learn more about his special assignment.

The views expressed in this blog do not necessarily reflect the views of KLTV/KTRE-TV or Raycom Media. They are solely the opinion of the author. All content © Copyright 2018 Lane Luckie


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