Who Actually Won the U.S., China Trade War?
China announced it will make available 10 billion yuan ($1.49 billion) for “one-off” subsidies to support farmers and ag companies involved in grain production, according to the country’s finance ministry. The subsidies aim to support grain farmers during the growing season, to alleviate any impact of rising costs and to “further mobilize farmers’ enthusiasm” for grain production.
The news comes as trade between the U.S. and China continues, but the relationship remains turbulent after the U.S.-China trade war, which began in July 2018 under the Trump administration. At that time, the White House imposed tariffs on $550 billion worth of Chinese goods. As a result, China dramatically dropped the amount of U.S. ag products it purchased.
Who Won the U.S./China Trade War?
Figuring out the answer is surprisingly complicated and contains important lessons for those tempted to wield tariffs like weapons, the WSJ reports (link). “There is plenty of evidence for a U.S. loss.” China fell 40% short of its commitment in a Phase 1 trade deal to buy an additional $200 billion of U.S. goods over two years, says Chad Bown, a trade expert at the Peterson Institute for International Economics and frequent critics of the accord. As for U.S. complaints about Chinese coercion, technology theft and other misdeeds, United States Trade Representative reports on China’s trade practices are clear: No progress.
There is also plenty of data to show that China was the loser in the trade war because it took a bigger economic hit than the U.S. Chinese companies facing American tariffs exported less to the U.S., reduced hiring, spent less on research and development and were less likely to start new firms, according to economists at Peking University, Fudan University and other leading Chinese universities. Overall, China’s GDP loss was three times as high as the U.S., estimates Yang Zhou, a Fudan University economist who did her research at the University of Minnesota.
The Real Winner?
Weighing whether China or the U.S. came out ahead in the trade war is an exercise in counting gains and losses. But some countries had nothing but wins; they started exporting to the U.S. goods that China once sold. Who won the U.S.-China trade war? In many respects, it’s been Vietnam.
