Trading Between the U.S. and China Will Never be the Same

This weekend, President Trump and President Xi Jinping spoke after the G-20 Summit. In Buenos Aires, they had dinner together and President Trump said he would cancel a tariff increase planned for Jan 1, 2019, under the condition China purchases more farm and industrial goods from America.

China and the U.S. will discuss alterations in Chinese practices like non-tariff barriers and forced technology transfer. The two countries aim to come up with an agreement in 90 days. China and the U.S. were once dependent on each other.

American manufacturers relied on Chinese industrial workers. China invested more than $140 billion in the U.S. since 2000. This dependence has changed with harsh U.S. rhetoric, high tariffs, export controls, and tighter investment. President Trump sets tariffs into motion with a vigor unseen since the 1930s. He is controlling China’s investments in Silicon Valley, reconsidering student and scientific visas, and labeling China as an economic aggressor.

The Trump Administration is proving too unpredictable. On Friday, President Trump signed a new North American trade deal alongside Mexico and Canada’s leaders. He seeks to remove the U.S. from NAFTA and will ask Congress for an all-or-nothing vote on the new deal. President Trump’s tariffs on more than $250 billion in Chinese goods resulted in China retaliating and buying soybeans from Brazil instead of America. After ZTE, a state-owned telecommunications firm was caught red-handed and violated terms of a settlement of criminal and civil charges tied to banned sales to North Korea and Iran, President Trump nearly shut the company down by preventing U.S. companies from selling to it.

China is vying for greater independence from the U.S. Xi Jinping is directing a campaign promoting self-reliance, touring modern industries in the south and the Rust Belt region in the northeast.

Last month, the Commerce Department started to draft regulations limiting advanced tech exports such as robotics. These controls are motivated by the possibility of China stealing or buying American technology for its own purposes. They are intended to uphold national security and U.S. technological leadership.

Recent cooperative talks between China and the United States is raising hopes for the future. Major business groups state higher tariffs would have led to high prices for consumers, crashed supply chains, and narrowed profit margins. Matthew Shay, president of the National Retail Federation, in addition to Dean Garfield, president of the Information Technology Industry Council, are a few who would like to see tariffs disappear.

Featured Image via Wikimedia