econintersect .com

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 29 July 2018

Trade Tariffs Will Harm US More Than China

by Dan Steinbock, Difference Group

-- this post authored by Gong Yingchun,

Global economic and policy strategist, Dan Steinbock, expressed his concerns over the escalating U.S.-China trade tensions in a written interview with, saying that trade tariffs will harm the U.S. economy more than China.

Please share this article - Go to very top of page, right hand side, for social media buttons.

In mid-June, U.S. President Donald Trump announced a 25-percent tariff on US$50 billion of goods imported from China, and China responded with the equivalent duties on the same value of U.S. exports to China.

Dan Steinbock, who has served as research director at the India, China and America Institute (US) and guest fellow at Shanghai Institutes of International Studies (China), argues that the current tariffs on the US$50 billion of goods that the U.S. and China have mutually imposed will not dramatically affect the economy of either country in the short-term. Steinbock said:

"In the U.S., the first-year impact could penalize 0.1 to 0.2 percent of U.S. GDP."

However, over the long-term, he said that these tariffs will harm the U.S. economy more than that of China.


In 2017, U.S. exports of goods to China hit US$130 billion, and China's exports of goods to the U.S. was approximately US$506 billion, according to the U.S. Census Bureau.

Therefore, the US$50 billion of goods targeted by the tariffs is approximately 38 percent of U.S. exports to China last year, but only 10 percent of Chinese exports to the U.S, according to Steinbock.

From this perspective, he contends that the U.S. is therefore "more exposed":

"These tariffs will harm America twice as much as China. If the tariff war escalates, the damage will increase proportionally."

Trump announced last Friday that he was ready to impose tariffs on all US$500 billion of imported goods from China. Steinbock said:

"A tenfold tariff escalation could multiply the adverse impact on the U.S. economy tenfold, which, in turn, could unsettle key stock indexes on Wall Street, disrupt the strengthening U.S. dollar, and undermine the Federal Reserve's tightening policies, as the Fed itself has indicated."

He stated that the Trump administration's new trade policy is "based on dated ideas and flawed economics," adding that the net effect of the "America First" doctrine in the international economy will have negative consequences for China, the U.S., EU, Mexico and Canada. Steinbock explained:

"It is even worse for America, especially when the U.S. sovereign debt exceeds US$21 trillion (106 percent of U.S. GDP), budget deficits are increasing, and fiscal expansion requires even more debt. Such economic policies rely on economic support by multilateral trading partners that Trump's tariff wars are alienating."

"Of course, Trump can subsidize U.S. farmers, for instance. But to do so he needs even more debt and what about other industries in the U.S. that also rely on exports to China. There are no winners in trade wars."

He pointed out that damage control is becoming more challenging as Trump's trade actions are also targeting Mexico, Canada, EU, possibly even Japan and South Korea. He said:

"The first effect is increasing economic uncertainty."

He also emphasized China's vital role in global economic growth:

"While global governance mechanisms remain U.S.-centered, China is actually now driving the global economy along with Brazil, Russia, and India."

He aded that unilateral U.S. trade actions against these countries are undermining growth prospects.

The International Monetary Fund (IMF) warned in its latest World Economic Outlook that rising trade tensions could negatively impact the prospects for global growth. Dr. Steinbock said:

"The IMF revised down the outlook for Europe, Japan and the U.K., as well as for India and Brazil. If Trump's stance prevails, that's just the beginning, over time the impact will be global and negative."

Responding to the current increasing trade tensions, China has reiterated that the country will stick to its reform and opening-up policy and work together with countries across the world to defend the principles of free trade and the multilateral trading system.

Steinbock concluded:

"China has sought to take into account both Chinese and global interests. That's the right approach."

Follow on Twitter and Facebook to join the conversation.

ChinaNews App Download

Click here for Historical Opinion Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.

Facebook Comment

Econintersect Opinion

advertisement - our newsletter sponsor

Biggest transfer of Wealth in US history has begun

A Maryland multimillionaire says the biggest legal transfer of wealth in American history has just gotten underway - here is the No. 1 step you must take

More details here...

[Click here to subscribe to our newsletter]

Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

 navigate econintersect .com


Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2020 Econintersect LLC - all rights reserved