Published: Wed, February 06, 2019
Markets | By Otis Pena

State of the Union: Trump vows to end China's job 'theft'

State of the Union: Trump vows to end China's job 'theft'

As the March 1 deadline looms for Beijing and Washington to reach a trade accord to stave off further tariffs in their months-long trade war, the USA will send its chief trade negotiator Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing early next week.

"The Pain and the Gain", said that "bilateral tariffs alter global competitiveness to the advantage of firms operating in countries not directly affected by them".

Countries that are expected to benefit the most from the trade war are the European Union members as exports in the bloc are likely to grow by United States dollars 70 billion.

Last year, Washington and Beijing imposed tariffs on more than $360 billion in two-way trade, after Trump initiated the trade war because of complaints over unfair trade practices.

The speech comes ahead of last-minute talks between the two countries aimed at reaching a deal on trade. If they fail to reach an agreement before the deadline, the United States has threatened to hike tariffs on $200 billion of Chinese goods from 10% to 25%.

The report also cautions that the effects "are consistent across different sectors" including machinery, furniture, chemicals and precision instruments, noting that bilateral tariffs "would do little to help protect domestic firms in their respective markets".

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Despite the shutdown, the US economy added a robust 304,000 jobs in January, marking 100 straight months of job growth. Trump responded, jokingly but with a telling sense of grievance, "They wouldn't do that for me, Judah".

The oilseed saga is also an example of why some believe Trump's transactional approach to trade talks is unwinding years of careful USA diplomacy. Chinese tariffs on USA soybeans have resulted in trade distortionary effects to the advantage of several exporting countries, in particular Brazil, which suddenly became the main supplier of soybeans to China. But the Obama administration and others before it, Sheets said, declined the offers of state-directed purchases in favor of urging China needed to move "away from central planning".

The study estimated that out of the $250 billion in Chinese exports subject to US tariffs, some 80 percent would be captured by firms in other countries, while 12 percent would be retained by Chinese firms and only six percent would be captured by USA firms.

"Countries that are expected to benefit the most from U.S". Mexico, Japan and Canada could all add more than $20 billion of new exports.

Australia, Brazil, India, Philippines, Pakistan and would also notice "substantial effects relative to the size of their exports", it said. As protectionist policies generally hurt weaker countries the most, a well-functioning multilateral trading system able to defuse protectionist impulses and maintain market access for poorer countries is of fundamental importance.

A continuing tariff battle may do further harm to "the still fragile global economy" by disrupting global supply chains and causing turmoil in commodity prices and financial markets, the United Nations said.

The report said Asian countries are likely to suffer most from protectionism.

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