World

The ‘trade war’ has cost the US economy a trillion dollars

February 27, 2021

Taher Al Hosary

Okaz/Saudi Gazette

JEDDAH —
In its first warning of the risks that the US economy will incur in the event of the continuation of the trade war with China, a study prepared by the US Department of Commerce revealed, finally, that the US economy will lose a trillion dollars if the administration of US President Joe Biden adopts stricter trade policies with China, or if it reached the point of a full-fledged boycott.

According to the study, the trillion dollars is only a fraction of the reported losses. The study indicated that, to date, the Biden administration has not changed the strict stance taken by his predecessor Donald Trump's administration with regard to China, despite the signing of the first phase of the trade agreement last year.

These losses are shaped by exorbitant trade fees and economic sanctions on Chinese companies, and the consequential denial of a market, which has always been the largest for America, for American exporters.

The US Commerce Department study concluded that by 2025, America would lose $190 billion annually from its domestic product, if customs duties expanded by 25% to include all Chinese goods, and this means less growth by nearly a trillion dollars.

This huge number comes, along with another $500 billion the economy would lose once if the United States sold half of its direct investment in China. American investors will lose $25 billion annually in capital gains as a result, and America will lose $15 billion to $30 billion annually in exported services trade if Chinese spending on tourism and education in America is halved.

The trade war between China and the United States began after former US President Donald Trump announced on March 22, 2018, that there was an intention to impose customs duties amounting to $50 billion on Chinese goods under Article 301 of the Trade Law of 1974, which lists the history of "unfair trade practices", including theft of intellectual property.

The Chinese government’s response was tariffs being imposed on more than 128 US products, the most famous of which was soybeans, as US duties on $34 billion in Chinese goods became effective on July 6, 2018. China did the same to the same value, and these fees represent a value that is 0.1% of GDP.

An official statement issued by the US administration confirmed that the proposed tariffs were in response to unfair trade practices from China over the years, including the theft of intellectual property from the United States.

On April 2, 2018, the Chinese Ministry of Commerce imposed tariffs on 128 US products, including aluminum, planes, cars, pork, soybeans, fruits, nuts, and then steel.


February 27, 2021
910 views
HIGHLIGHTS
World
29 minutes ago

Australian conman caught after six-month manhunt

World
36 minutes ago

Indian teen arrested for beheading pregnant sister

World
42 minutes ago

US will pay price for Olympics boycott, China says

X