Is the Trump Trade War Finally Coming to an End?

After 17 arduous months of tension and the constant back-and-forth of tariffs, it appears the United States’ trade war with China is finally coming to an end. A statement from President Trump this past week points to an imminent trade deal, expected to be signed by the new year or shortly thereafter. When signed, it’ll cap off an extremely divisive time in global trade relations and a point of political contention that’s made serious headlines since it began in 2018.

Little is known about the deal so far. Although the details of the deal still have yet to come to light, what is known is that America will forgo the latest round of tariffs set to affect Chinese imports this month. The United States is also reducing existing import taxes on about $112 billion in Chinese goods from 15% to 7.5%.

This trade deal — dubbed Phase One — was originally announced in October; however, several prickly issues kept negotiations going until now. The White House expects the multi-phase deal to be in place after the 2020 presidential election — a prospect that could be troublesome pending a party change.

Winners and losers in the Trump Trade War

There’s been countless headlines about winners and losers in the trade war with China; however, we won’t know the true extent of the economic impact for years to come. What we do know is that this has been the single biggest disruptor to global trade in more than nine decades.

There are several figures that shed light on the reason a deal is being brokered now, almost 17 months after the tariff exchanges started.

In the United States, farmers have been categorically devastated by the tariffs, alongside manufacturers. Soybeans and other agricultural products accumulated $120 billion in tariffs from China so far, generating $5.6 billion in revenue losses for farmers. Evidence of the trade war’s effect on manufacturing can be seen in the consistent contraction of the Manufacturing ISM, which has been on the downtrend for roughly 15 months, coinciding with tariff escalation. All told, the United States faces about $54 billion in losses.

As bad as American farmers and manufacturers have had it, the overall Chinese economy has suffered similarly. Estimates put China’s losses at $35 billion in exports, much of it appearing to be long term. Whereas companies in the United States have shifted supply chains and weathered general price hikes in the interim, Chinese companies have been unable to follow suit and have realized losses in a much more realistic fashion.

Why is the trade war with China ending?

Without a clear picture of winners and losers, or a clear dictation of what the brokered deal looks like, many have begun to wonder why the trade war has so abruptly halted. Speculation holds many answers.

Most believe the 2020 election cycle in America is the primary driver of a swift deal. If President Trump can show a deal before November, it’s likely to boost his polling numbers. Another culprit is farming and manufacturing, which figure to play a key role in the deal. These staple American sectors have hit hard times and represent a significant portion of the current administration’s voter base. Buoying farming and manufacturing may serve to instill new hope in the economy in 2020.

Regardless of what’s drawing the trade war to an end, it’ll likely be several years before we know the true extent of the damages. Pending the language of a deal, it remains to be seen whether there are new rules for global trade or a return to the status quo after a rocky period.

The trade war may be coming to an end, but it’ll take time for prices to level out. If you’re in cost-savings mode, finding a reliable maintenance and repair partner is a smart option for improving operations. You can always count on the professionals at Global Electronic Services. Contact us for all your industrial electronic, servo motor, AC and DC motor, hydraulic, and pneumatic needs — and don’t forget to like and follow us on Facebook!
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