Impacts of the US-China trade war by CHIN RUI HENG HCI

Impacts of the US-China trade war by CHIN RUI HENG HCI https://padlet.com/191245n1/btezk779pry4wwx All groups will have 10 minutes to research on the impact allocated to you. Afterwards, each group will be given 2 minutes to present your findings. en-us 2022-08-27 14:04:26 UTC 2026-03-19 21:02:08 UTC hello@padlet.com Loss of jobs https://padlet.com/191245n1/btezk779pry4wwx/wish/2277224412 U.S. President Donald Trump’s trade war with China has caused a peak loss of 245,000 U.S. jobs, but a gradual scaling back of tariffs on both sides would boost growth and lead to an additional 145,000 jobs by 2025, a study commissioned by the U.S.-China Business Council (USCBC) shows.]]> 2022-08-31 04:30:36 UTC https://padlet.com/191245n1/btezk779pry4wwx/wish/2277224412 Some data if you want https://padlet.com/191245n1/btezk779pry4wwx/wish/2277225118 U.S. goods and services trade with China totaled an estimated $615.2 billion in 2020. Exports were $164.9 billion; imports were $450.4 billion. The U.S. goods and services trade deficit with China was $285.5 billion in 2020.
China is currently our largest goods trading partner with $559.2 billion in total (two way) goods trade during 2020. Goods exports totaled $124.5 billion; goods imports totaled $434.7 billion. The U.S. goods trade deficit with China was $310.3 billion in 2020.]]> 2022-08-31 04:31:30 UTC https://padlet.com/191245n1/btezk779pry4wwx/wish/2277225118 Loss of GDP https://padlet.com/191245n1/btezk779pry4wwx/wish/2277225472 A study by Oxford Economics included an “escalation scenario” which estimates a significant decoupling of the world’s two largest economies could shrink U.S. GDP by $1.6 trillion over the next five years. This could result in 732,000 fewer U.S. jobs in 2022 and 320,000 fewer jobs by 2025, it said.]]> 2022-08-31 04:31:55 UTC https://padlet.com/191245n1/btezk779pry4wwx/wish/2277225472 Unemployment of local citizens https://padlet.com/191245n1/btezk779pry4wwx/wish/2277226348 The study estimates that U.S. exports to China support 1.2 million American jobs and that Chinese multinational companies directly employ 197,000 Americans, while U.S. companies invested $105 billion in China in 2019.]]> 2022-08-31 04:32:54 UTC https://padlet.com/191245n1/btezk779pry4wwx/wish/2277226348 Trade deficit meaning https://padlet.com/191245n1/btezk779pry4wwx/wish/2277226628 Amount by which the cost of a country's imports exceeds the value of its exports.

]]> 2022-08-31 04:33:13 UTC https://padlet.com/191245n1/btezk779pry4wwx/wish/2277226628 Inflation https://padlet.com/191245n1/btezk779pry4wwx/wish/2277226810 Inflation occurs when the same sum of money is able to buy less goods, and hence a country's currency becomes worth less.
Inflation shot up by an estimated 8.5 per cent annualised rate in March 2022 in the US, this is due to the tariffs on goods from China being 6 times higher than before 2018 (before the trade war).]]> 2022-08-31 04:33:28 UTC https://padlet.com/191245n1/btezk779pry4wwx/wish/2277226810 https://padlet.com/191245n1/btezk779pry4wwx/wish/2277227285 Effects of the Trade Deficit
U.S. companies that can't compete with cheaper Chinese goods must find ways to cut costs to stay competitive. As a result, U.S. manufacturing (measured by the number of jobs) declined by 35% between 1998 and 2010, before rebounding by about 7% through the end of 2020. Overall, manufacturing jobs in the United States have declined by about 30% since 1998.

Trade imbalances become an issue when there isn't a relatively equal amount of trade between trading partners. For example, the U.S. feels that China isn't living up to its trade obligations, and thus that actions need to be taken. These usually result in trade embargoes or tariffs that can raise the costs of imports for the offending nation.

The U.S. economy is affected by the trade deficit. Jobs and capital are moved offshore, causing financial difficulties for consumers and smaller businesses. The tariffs imposed by the administration have been paid by U.S. companies, for the most part, further costing them $46 billion after losing over $1.7 trillion in stock values.9

China is also one of the leading holders of U.S. Treasuries, which it purchases to reduce the value of its currency, thus allowing it to maintain a low exchange rate with the dollar. U.S. consumers benefit from low prices, and the government and economy benefit from capital being invested into the country.]]> 2022-08-31 04:34:04 UTC https://padlet.com/191245n1/btezk779pry4wwx/wish/2277227285 Higher inflation https://padlet.com/191245n1/btezk779pry4wwx/wish/2277228010 A trade war leads to higher input prices & thus higher costs of production for firms, which shifts the AS curve down; keeping AD constant this results in a higher GPL (inflation)]]> 2022-08-31 04:34:52 UTC https://padlet.com/191245n1/btezk779pry4wwx/wish/2277228010 https://padlet.com/191245n1/btezk779pry4wwx/wish/2277229268 See https://www.niesr.ac.uk/wp-content/uploads/2021/10/Box-The-effects-of-the-trade-war-on-inflation-4.pdf

Conclusion from simulation: 'Figure A1 shows that the consumer price inflation rate both in the US and China would increase by about 0.2 percentage points
relative to the baseline projection over three years following a 15 per cent increase in tariffs, a result consistent with previous
work (Liadze, 2018a).']]> 2022-08-31 04:36:14 UTC https://padlet.com/191245n1/btezk779pry4wwx/wish/2277229268 Inflation impact on Singapore https://padlet.com/191245n1/btezk779pry4wwx/wish/2277229420 Singapore core inflation approaching 2 percent in 2018, is already 2.30% in 2021. Singapore has a lot of bilateral ties with both China and US, while the tariffs don't directly impact Singapore, raw materials used in production of goods in US in China become more expensive, so this also increases the price of consumer goods exported to Singapore ]]> 2022-08-31 04:36:26 UTC https://padlet.com/191245n1/btezk779pry4wwx/wish/2277229420 https://padlet.com/191245n1/btezk779pry4wwx/wish/2277230470 From Financial Times (https://www.ft.com/brandsuite/cme-group/trade-war-costs-consumers-companies-nations/index.html): 'Import tariffs are essentially a sales tax and raise costs for consumers. The question is by how much? The simplest assumption is that consumers will bear 100% of the cost of the increased tariffs. For example, if the U.S. has a $20 trillion GDP and the government imposes a 10% tariff on $200 billion worth of imported goods, then U.S. consumers would see the average price level rise by 0.1% (10% X $200 billion / $20 trillion).

The good news for consumers is that this calculation ignores the notion that some of the impact on consumer prices will likely be absorbed in the form of lower corporate profits – both in the United States and China. Additionally, the trade war negatively impacts China’s renminbi (RMB) and through it many emerging market currencies (Figure 2).

Weaker emerging market currencies translate to lower import costs for U.S. consumers, offsetting a portion of the tariff impact. As such, we assume that roughly half of the consumer impact from higher tariffs will be absorbed elsewhere.'

See also https://edition.cnn.com/2022/05/18/business/janet-yellen-g7-comments/index.html

]]> 2022-08-31 04:37:45 UTC https://padlet.com/191245n1/btezk779pry4wwx/wish/2277230470 Disruption to supply chain https://padlet.com/191245n1/btezk779pry4wwx/wish/2277231611 Due to trade wars, there is proctentist policies towards exports and imports of raw materials. Basic materials for production such as steel, computer chips mainly come from certain regions, such as America as they own these illectual properties. US-China trade war has resulted in America banning and dereasing exports of computer chips to china, affecting production of mobile and computer devices. Decreased exports of computer chips affects the assembly process and forces companies to move back to the US for production, decreasing China's output and stunting their growth. Decreased output of computer chips also cause companies to be unable to produce sufficient mobile devices, for example Huawei, leading to them having less market share, and eventiually loss of business]]> 2022-08-31 04:39:06 UTC https://padlet.com/191245n1/btezk779pry4wwx/wish/2277231611 Stats for China https://padlet.com/191245n1/btezk779pry4wwx/wish/2277232323 The consumer price index (CPI) grew 2.1 per cent in May from a year earlier, flat from April, though still at a six-month high, which reflected rising prices for crude oil, farm produce and material imports.

In comparison, inflation hit at a four-decade high of 8.6 per cent in the US and 8.1 per cent in the Eurozone last month. It surged to 9 per cent in Britain in April.

China’s core CPI, which excludes the volatile prices of food and energy, rose by 0.9 per cent year on year last month, unchanged from April. Headline inflation for the first five months grew by 1.5 per cent, comfortably below the government’s full-year maximum of 3 per cent.
The producer price index (PPI), which measures the prices for products as they leave factories, rose by 6.4 per cent in May, down from a peak of 13.5 per cent in October 2021.

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