• Home
  • Home
  • Daily Papers
  • Awards / Events
  • GlobalCapital
  • Free Trial
Close

Copying and distributing are prohibited without permission of the publisher.

Watermark
  • Print

US-China trade war to intensify after mid-term elections

Xi IMF 2018
By GlobalMarkets
11 Oct 2018

The world should brace for an escalation in the trade war between China and the US following the American mid-term elections, that could see Donald Trump test the strength of Chinese resolution with steeper tariffs, trade experts tell GlobalMarkets.

Xi bigger 2018
Xi: facing US demand for less state interference
The trade war between China and the US is likely to escalate again once the American mid-term elections are out of the way as the real battle lines between the two countries start to come into sharper focus, economists have warned.


S&P Global Ratings global chief economist Paul Gruenwald told GlobalMarkets that the war was not really about trade at all, at least as far as the US was concerned. “The US could reduce its trade deficit by getting consumers to save more,” he said. “In our view, the real issue is the structure of the Chinese economy.”

Gruenwald said the world was now starting to get a more coherent picture about what America was seeking from Chinese president Xi Jinping, which appeared to be a level playing field for its companies, less state-owned enterprises and even fewer subsidies for sensitive sectors such as tech.

He added that since these issues formed the lynchpin of China’s economic model, “it’s not clear that Beijing will make the concessions the US wants”.

Fitch’s global chief economist, Brian Coulton, agreed. “If you look at the list of US demands it’s not just limited to China’s trade policy, but the way it manages its economy,” he told GlobalMarkets.

He believes the Sino-US dispute is a very different animal from the one that led to the re-configuration of the North American Free Trade Agreement (Nafta). Then the US negotiators typically played good cop with the Canadians and Mexicans, while the US president played bad cop.

“I don’t think the US is playing a tactical game with China to gain more leverage,” Coulton continued. “I think distrust of China’s trade tactics runs quite deep within the current administration and they’re looking for some quite significant concessions.”

NEW TARIFFS

Coulton said that it would be harder for the two sides to make a breakthrough when they were not even talking to each other, something he noted had never happened when Nafta was being re-negotiated.

He also concluded that “a world run by global strong men isn’t one that’s conducive to dealing with the world’s macro, strategic or structural challenges in a co-ordinated way”.

But a Strategic Economic Dialogue 2.0 is exactly what China and the US need, according to Gruenwald. He feared the US would not re-open the formal communication channels, which the Bush administration set up a decade ago with a very different Chinese president, Hu Jintao, who was keen to promote China’s “peaceful rise”.

Rather, he thinks the current administration may be waiting until the mid-terms are gone before it slaps a new round of tariffs on the kind of imported electronic goods and toys which will hit US consumers directly in their wallets.
By GlobalMarkets
11 Oct 2018
  • HOME
  • GLOBALMARKETS
  • Latest news from GlobalMarkets

    1. EM debt pressures build as IMF calls for ‘early’ action on restructuring

      15 Oct 2020
    2. Post-Covid world will demand ‘new more humane’ capitalism

      15 Oct 2020
    3. IADB to roll out hurricane clauses as small state pleas gain traction

      15 Oct 2020
    4. IMF will need Bank’s help to fulfil climate ambition

      15 Oct 2020
    5. Biden victory to boost Asia but China tensions to remain

      15 Oct 2020
  • Most viewed: GlobalMarkets

  • Print
  • Latest news from GlobalMarkets

    1. EM debt pressures build as IMF calls for ‘early’ action on restructuring

      15 Oct 2020
    2. Post-Covid world will demand ‘new more humane’ capitalism

      15 Oct 2020
    3. IADB to roll out hurricane clauses as small state pleas gain traction

      15 Oct 2020
    4. IMF will need Bank’s help to fulfil climate ambition

      15 Oct 2020
    5. Biden victory to boost Asia but China tensions to remain

      15 Oct 2020
  • Most viewed: GlobalMarkets

Further reading

  • EM bonds start to suffer as UST volatility takes toll

    Emerging Markets

    EM bonds start to suffer as UST volatility takes toll

  • Banks and investors’ backing of fossil fuels clash with their climate pledges

    SRI / Green Bonds

    Banks and investors’ backing of fossil fuels clash with their climate pledges

  • Petbra bonds recover but CEO sacking raises Brazil doubts

    Latin America

    Petbra bonds recover but CEO sacking raises Brazil doubts

  • Banks grow anxious over ECB’s ESG criteria

    Covered Bonds

    Banks grow anxious over ECB’s ESG criteria

Global Capital

All material subject to strictly enforced copyright laws. © 2020 Euromoney Institutional Investor PLC group

About Us

  • About us
  • Contact us
  • Modern Slavery Act Transparency Statement

Connect with us

  • LinkedIn
  • @GlobalCapNews

Services

  • Advertise
  • Our partners
  • RSS
  • GlobalCapital Events
  • Events calendar
  • Social community

My Account

  • Renew
  • Subscribe
  • FAQ
  • Feedback
  • Terms and Conditions
  • Privacy Policy
  • Cookies

Quick Links

  • All League Tables
  • Bank Profiles
  • Bond Comments
  • Deals & Deal Pipelines
  • Polls and Awards
  • GlobalCapital Archive
  • Special Reports Archive