Projecting Trade in 2021; A look back and a look ahead
Monday Morning Wake Up Call
January, 4, 2021
Trump’s Trade War with China could smooth way for Biden administration to do better
(WSJ) At first glance, the Trump administration appears to have left President-elect Joe Biden with a strong hand to play in trade negotiations with China. But bringing things to a successful resolution will be challenging on multiple fronts.
Despite the so-called “phase one” trade agreement struck in January 2020, tariffs between the two nations remain elevated. U.S. levies on Chinese goods have gone from an average level of 3.1% in January 2018, before tensions kicked into high gear, to 19.3% now, according to an analysis by the Peterson Institute for International Economics. That is down only marginally from 21% before the deal. China’s average tariffs have risen, too, from 8.0% before the trade war to 20.3% now.
At the same time, China is all but certain to miss its commitments to purchase a series of U.S. goods. By November, for instance, it had purchased only around two-thirds of the volume of agricultural products it committed to for the entire year, according to PIIE.
In theory, this should give Mr. Biden a strong negotiating position. He has already said he wouldn’t immediately lift the tariffs, which should prove more punishing to China than the U.S., as its economy generally depends more on exports. Yet the Chinese economy is currently performing strongly because the country curbed the spread of the coronavirus earlier and thanks to a pandemic-triggered surge in global demand for its exports, from face masks to videogame consoles. Indeed, in November China’s trade surplus hit a new monthly high in dollar terms of $75 billion.
Manufacturers Want Biden to Boost ‘Buy American’ Practices
President-elect has proposed more domestic government purchasing, which President Trump and others pursued with mixed results
President-elect Joe Biden is pledging to use the power of the federal government to buy American goods and jump-start domestic manufacturing. Some companies say rules that are too restrictive could raise their costs and complicate supply chains for items not made in the U.S.
Mr. Biden’s “buy American” proposals echo those of previous presidents, including President Trump, who issued executive orders to spur more federal purchases of U.S. goods and sought to use tariffs to disadvantage foreign producers. The results for companies have been uneven, with some benefiting from increased sales and others dealing with higher expenses.
Mr. Biden said during his campaign and in a speech after the election that he would tighten “buy American” rules. He has proposed $400 billion in federal spending on infrastructure projects that use American products such as domestically made steel and protective gear for medical workers battling the coronavirus pandemic. He has also proposed that Congress devote an additional $300 billion to research and development of new products. “From autos to our stockpiles, we’re going to buy American,” Mr. Biden said in November.
Those promises could be difficult to turn into reality, however, and could face resistance in a divided Congress. Some economists and trade experts said such government purchasing might help some companies but not the industrial sector overall. The policies carry risks including higher prices and retaliation from other countries against U.S. exports, said some executives and economists. “It raises the cost of things that will be purchased,” said Mary Lovely, a senior fellow at the Peterson Institute for International Economics.
Effects of COVID-19 Pandemic and Response on the U.S. Import and Export Price Indexes 2020
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To Read More: https://www.marketwatch.com/press-release/shipping-containers-market-analysis-2021-global-industry-size-top-performing-regions-market-growth-segments-by-opportunities-with-strategic-assessment-forecast-to-2025-2020-12-28?siteid=bigcharts&dist=bigcharts&tesla=y