From News Reports
The highly anticipated U.S.-China summit held in Florida this past week was upstaged by President Donald Trump’s decision to bomb Syria, but the two events aren’t totally unrelated. The decision to hit Bashar al-Assad is seen by many observers as a signal to a defiant North Korea (and by extension, its ally, China) that Trump is willing to use military force to get what he wants.
The U.S. imported $480 billion worth of Chinese goods last year, while selling just $170 billion worth of exports to China. This makes China the biggest contributor to America’s trade deficit (about 60 percent). That the 100-day trade talks will address this issue first and foremost is significant. A large trade deficit usually goes hand-in-hand with a small manufacturing sector, which connects with Trump’s promise to address the outsourcing of jobs.
According to David Dollar at the Brookings Institution, “Between 2000 and 2007, U.S. manufacturing jobs fell sharply, from 16.9 million to 13.6 million. The 2008 financial crisis pushed the number lower, to 11.2 million, although the number has since been fairly stable.” Dollar notes that up to 40 percent of these job losses can be traced back to the huge influx of Chinese goods into the U.S. after China joined the World Trade Organization in 2001. And though Trump threatened a whopping 45 percent tariff on Chinese goods, it’s important to note that extreme protectionism hasn’t been shown to produce a smaller trade deficit.
China has agreed to restructure the current trade relationship in order to reduce its surplus as a way of dealing with inflation back home. Also, according to the Financial Times, “China will offer the Trump administration better market access for financial sector investments and US beef exports to help avert a trade war.”
– The American Conservative