Preston Stanley - China Bears Brunt of Trade War

Preston Stanley - America could benefit from US-Sino trade war in the short term.

In July this year, in an effort to compel China to narrow its trade deficit with the United States, US President Donald Trump hit the country with hefty import tariffs. For months, Trump had threatened to penalize the world's second-largest economy for its unfair trade practices.

China retaliated with tariffs on US imports and, amidst ongoing stop-start negotiations, the two countries have continued to escalate the bitter trade dispute. To date, the US has imposed tariffs on Chinese imports to the value of $250 billion and has threatened to impose tariffs on the remaining products that have not yet been subjected to import duties. The new tariffs will come into effect from the 1st of January, next year.

China has responded with retaliatory tariffs on US goods worth $110 billion and has threatened to respond to the new round of US tariffs with measures that would affect US businesses operating in China.

While Preston Stanley analysts say many US companies in China have been considering relocation due to the anticipated effects of the trade war, few have decided to make big changes at this point with most waiting to see outcome of the G20 summit between Trump and Xi which is due to take place at the end of this month.

Preston Stanley analysts say trade wars are usually a lose-lose situation for all involved, as trade wars and protectionism result in smaller export markets but, for the time being, it seems that China is bearing the brunt of this trade spat.

Due to Trump's strategic selection of products to be subjected to import tariffs, the impact on US consumers has been minimized, and analysts at Preston Stanley say China's losses could ultimately translate to gains for the US.

Source: Preston Stanley