Fallout from a trade war

Nnext round will leave the two sides bloody nosed

There is a fair amount of consternation among countries regarded as fellow movers and shakers of the world’s economy as well as the bit players and bystanders over the unfortunate escalation in the trade war between the United States and China. Already, the world’s grass lies withered and dry under the hulking feet of the fighting pachyderms as a result. The two economic powerhouses have pushed their tariff battle to the edge, clamping measures on more than $360 billion of goods. By all indications it would appear that the economic firefight is going to get messier — and possibly take a bigger toll than previously expected — before it gets any better. On either side of the Pacific companies are groaning in pain. Nearly half of the goods that China sells to the US each year will be hit by American tariffs.

Instead of gloating over what it calls “effective and unprecedented” punitive measures, the Trump administration would be well advised to pause and give a second thought to the fate of countries and companies being squeezed by the tit-for-tat tariff blow-up which is threatening to alter the world’s economic architecture brick for brick and mortar for mortar. A swift rethink is in order because it is not only Chinese manufacturers that are feeling the blow. Even US firms have been crippled by the impact of the tariffs.

The next round will leave the two sides bloody nosed. China may want to target giant US corporations such as Apple and Boeing, realising it has almost exhausted the list of retaliatory measures it can still use against the US. While Beijing does not like being kicked around, it will probably be counting the risks that punitive steps against the US will have on investments in its country. We advise caution and call upon the two sides to resume dialogue.

Published in The Express Tribune, September 20^th, 2018.

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