Trade wars and China as a WTO developing nation

Good news on the US trade front, that is all according to President Trump. Trump touted the meeting between himself and European Union President Jean-Claude Juncker as a major breakthrough on trade negotiations – tweeting a quote “love” for one another. One could argue that the spit swapping was merely good publicity rather than a major breakthrough on trade.

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After all, EU countries make up a small share of the US trade deficit – the big fish to fry is China.

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The US has the largest economy in the world, about 20 trillion dollars. China comes in second at about 14 trillion. But China still maintains itself through the World Trade Organization to be a developing nation – this allows for certain perks such as higher tariffs and government subsidies to its business interests. Which is something that Trump appears to be trying to change.

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Trump wants China to start playing like the grown up economy that it appears to be. Put on its big boy pants so to speak.

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But why did Trump initially take on the EU and other allies in a tariff war? How does that help with the larger problem of the trade deficit with the Chinese?

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Luckily it appears that the EU and the US have kissed and made up for the time being. China produces more than it can consume domestically. It has to sell its excess wares somewhere, and that somewhere is the global market place.

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A united global front against the unfair Chinese trade practices is the best way to go.

Perhaps all this noise created by President Trump is in some way a strategy to bring this about. Who knows? But China appears to be dedicated to this stand off for the long haul, and the recent $12 billion dollar agriculture bailout demonstrates that Trump is as well. Who will win? Who will loose? Who will blink? But there are going to be losers and winners domestically as well due to these tariffs. It appears that the steel industry is getting a boost, while the auto industry and agriculture are going to take a hit.

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