Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By China Law Blog
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

The US-China Trade War: What’s Next?

% of readers think this story is Fact. Add your two cents.


A lot has gone on with China this last week.

1. On August 1, 2019, President Trump announced that the United States will on September 1 impose a 10 percent tariff on essentially all Chinese goods not previously subject to tariffs. This latest round of tariffs is being referred to as “List 4” tariffs and it will hit about $300 billion worth of imports from China. If that new tariff goes ahead, it will mean that nearly all products (save for those all imports of Chinese goods will soon be subject to tariffs.

2. Yesterday, China’s central bank allowed the Yuan to weaken to more than 7 RMB per dollar. CNBC nicely describes the significance of this:

The Chinese authorities have not let the currency weaken past the 7 yuan-per-dollar threshold since the global financial crisis. In fact, they have in previous years — such as in 2016 — burned a substantial portion of their foreign reserves to defend the currency from breaching that mark.

It’s for that reason that currency experts have long viewed that mark as a psychological important level. Breaching 7 yuan per dollar is a crucial development partly because investors don’t know how much more weakness the PBOC [People’s Bank of China] is willing to tolerate, so they could sell their investments in China to curb losses — and thereby trigger significant capital outflows from the country.

3. The Chinese government also yesterday instructed Chinese state-owned companies to stop buying U.S. agricultural products. This will likely mean non state-owned Chinese companies will greatly reduce their buying of ag products from the United States as well.
4. The United States Treasury then labeled China a “currency manipulator.” The last time Treasury designated any country as a currency manipulator was in the early 1990s, when China was named. Labelling China as a currency manipulator means the U.S. will likely lead to the United States requesting the International Monetary Fund (IMF) take steps to curb any unfair competitive advantages created by China’s currency manipulation.
What will the results be from all of the above and what should your company do about it?
This post will address the anticipated results. Tomorrow’s post will lay out what you should do about it.

I predict the following over the next few months:

1. The 10% List 4 tariffs will go into effect on September 1.

2. There is about a 50-50 chance most (if not all) tariffs against China will rise from 10% to 25% within the next couple of months.
3. China will stop buying U.S. agricultural products directly from the United States, but I expect it will continue to receive large quantities of US ag products via third countries. China is very concerned about food inflation and though it will do what it can to stop buying US ag products, I do not see those purchases truly ending. If China switches from buying X ag product from the United States and starts buying X ag product from Brazil, we should expect Y country that was buying X ag product from Brazil to start buying more X ag product from the United States.
4. The RMB will slowly weaken, but I doubt it will go as high as 7.5 RMB per dollar within the next six months. I do not see this weakening of the RMB as a big deal for the United States — if anything, it will reduce the price of products purchased from China. See Who Pays the Tariffs on China Imports? President Trump vs. CNN and What YOU Can do NOW to Reduce Your China Prices.
5.  I do not see the IMF penalizing China for currency manipulation and if it does, I do not see those penalties as moving the needle on anything.
6. China will retaliate against the United States in any way it can while remain very wary of damaging its own economy in doing so. China will reduce its purchases of goods from the United States. China will favor domestic companies (and perhaps companies from other countries as well) over U.S. companies. China will step up the enforcement of its laws as against foreign — especially U.S. — companies. See How to Do Business in China Without Going to Prison and The Five Keys to China Company Compliance. Though this new wave of tightening enforcement is tougher than any that proceeds it, smart, well-run U.S. companies will survive it.

7.  Companies (U.S. and otherwise) that manufacture their products in China for export to the United States will continue to move their manufacturing out of China, if they can.  See How to Move Your Manufacturing from China AND Protect Your IP.

8. Most economists will continue to insist that the trade war will end soon because it is bad for the economies of China and the United States and the rest of the world. Those whose livelihoods depend entirely on China will make the same prediction. My law firm’s international lawyers will continue to insist there is no resolution in sight. See When Will the US-China Trade War End? It’s the New Normal. ‘

What do you see happening?

Tune in tomorrow for how your company should respond to the above.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.


Source: https://www.chinalawblog.com/2019/08/the-us-china-trade-war-whats-next.html


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!


Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST


Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)

Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen!

Nascent Iodine - Promotes detoxification, mental focus and thyroid health.

Smart Meter Cover -  Reduces Smart Meter radiation by 96%! (See Video).

Report abuse

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.