Friday, April 3, 2020

Trump miscalculates trade war, bad news for his supporters

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Zubair Yaqoob
Zubair Yaqoob
The author has diversified experience in investigative journalism. He is Chief content editor at wnobserver.com He can be reached at: [email protected]

American trade policy since taking office by Donald Trump aligned as president in January 2017 confrontation. His intention was to conclude new “deals” with countries with chronic trade deficits. This was also due to the desire to give American workers’ interests greater weight.

But according to an analysis by the Deutsche Bank in its monthly report presented on Monday, this calculation does not work. “All in all, the findings indicate that the United States has so far not been able to benefit from the recent trade policy measures,” says the article, which presents the results in a simulation calculation.

Macroeconomic production in the United States has been dampened slightly and inflation has increased. “There are no noticeable positive employment effects,” write the bank economists. Contrary to what was sometimes assumed, there were no “laughing third parties” who would have benefited from a redirection of trade. The fact that uncertainty has increased for investors around the world due to undesirable dampening effects of politics.

Effects of trade policy were textbook-like

The authors point out that the effect was downright textbook-like. In recent decades, some emerging and developing countries have managed to integrate into the international division of labor by opening their markets.

After the newly introduced tariffs against imports from China and Europe, the development has been partially reversed with harmful results. Therefore, a lot to be said for an economy as a whole hardly being better off in the short term, thanks to higher import duties, the report says.

At the end of 2019, around two third of the exchange of goods between America and China was subject to additional duties. Even if a first agreement concluded earlier this year defuses the dispute, a large part of the additional duties will remain in force.

(Goods) imports from China were seasonally adjusted worth more than a fifth less in autumn 2019 than before the introduction of customs duties. The trade deficit narrowed, but the overall current account deficit remained the same.

The additional tariffs have made intermediate products more expensive in America,
the decline is believed to be largely due to the additional duties. The components that were particularly affected by the tariffs on consumer goods rose in the American consumer index. Redirection effects of goods traffic could only be demonstrated for a few countries.

The hope for the American President’s agenda is that people will find work again in the industrialized part of the country. However, the declining imports from China were not replaced by domestic products. “In any case, the production of goods in America, which was subject to additional duties in trade with China, developed no different from that of other products,” the authors write.

Read also: Trump: Trade talks with China are progressing well

In contrast, the American consumers were burdened by the tariffs. Economic growth in America and China was slowed down slightly. Some new jobs in the steel industry would face larger job losses in the downstream industry.

Zubair Yaqoob
Zubair Yaqoob
The author has diversified experience in investigative journalism. He is Chief content editor at wnobserver.com He can be reached at: [email protected]

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