By now, the US-China trade war has entered a stage where it’s almost impossible for either one to surrender. The belief is such that the dispute will continue until at least the 2020 U.S. presidential election. Donald Trump is betting that his get-tough-on-China platform will rally American voters and help him get re-elected for the second term, just as it did in 2016.

 

China, on the other hand, is trying to make life difficult for President Trump by crushing the American farmers. However, Mr. Trump could be in trouble if he pushes his buttons too aggressively as employment growth in manufacturing has slowed over the past year. His supporters will begin questioning his trade war if the dispute produces no obvious results.

 

In the same breath, President Xi Jinping has to be very careful not to over-retaliate. China has to pretend that they’re merely defending themselves, and not taking an active role in attacking the U.S. The perception must be that the U.S. is attacking while the Chinese are defending. That’s because Americans will rally behind Trump if they sense the U.S. is under attack.

The economic conflict between the world’s two largest economies was started by U.S. president Donald Trump after he blamed China for “unfair trade practices”, including growing trade deficit, the theft of intellectual property (IP), and the forced transfer of American technology to China. Trump has been trumpeting that the U.S. was being “ripped off” by China.

 

Over the weekend, the latest tariffs announced by Trump have begun kicking in. A 15% tariff went into effect early Sunday on US$112 billion of Chinese imports – including clothing, shoes, cameras, desktop computers, food and thousands of other household items. That’s nearly half of the products to be taxed beginning September 1, the first round of Trump’s plan to tax every goods from China.

 

Another round of U.S. tariffs on Chinese imports is set to go into effect December 15, which would make laptops, game consoles and smartphones more expensive. In total, U.S. tariffs on September 1 and December 15 will hit US$300 billion of Chinese imports. According to J.P. Morgan, the new tariffs could cost the average American household US$1,000 a year.

On the same Sunday, China also retaliated, rolling out higher tariffs – between 5% and 10% – in stages with a total of about US$75 billion in U.S. goods like soybeans and crude oil. About one third of the more than 5,000 American products are affected this round. Taking a page from Trump’s playbook, China will resume an extra 25% duty on cars imported from the U.S. on December 15.

 

Among American products that the Chinese have slapped with a 5% tariff include yogurt, yellow soybeans, crude oil, hydrogen, oxygen, nitrogen, pigs, live orchids, non-alcoholic beer, pneumatic rubber tires, canned pear, cranberry juice, couscous pasta, canned pineapple and coffee pods and coffee beans.

 

American goods which are subjected to 10% tariff include frozen lobster and shrimp, pistachios, walnuts, macadamia nuts, pine nuts, bananas, avocados, lemons, oranges, raisins, frozen chicken feet, oatmeal, peanut butter, vodka and toothpaste. So, which states in America that will be hit the hardest after the latest tariff hikes in the trade war?

The answer can be found in statistics published by the U.S. Census Bureau. The bureau tracks imports and exports of goods, broken down by each U.S. state and DC. The information was extracted based on the top-25 trading partners and needless to say, China were among the top ten destinations for exports and imports for almost every state in the U.S.

 

And if you plug this information into the U.S. map, it gets super interesting. Every state exports something to China. States like California, Texas, and Washington had over US$16 billion in export goods to China in 2018. Nevertheless, the map shows there were more than a dozen of states that exported less than US$1 billion of goods to China last year.

 

Hence, when comes to biggest export trading partner, the map shows mostly Canada and Mexico – not China. In essence, the U.S.’ neighbours are American closest and most important export trading partners. A whopping 33 states exported most goods or products to Canada, while 7 states rely heavily on Mexico for the exports.

However, the world suddenly becomes upside down when a map to illustrate the biggest import trading partner for the U.S. is unveiled. China was the top import trade partner for 24 states and the District of Columbia. In fact, nearly every state had hundreds of millions or billions of dollars in goods purchases with China, ranging from US$156 million in Montana to US$161.2 billion in California.

 

The maps of U.S. biggest export and import trade partner are consistent with President Trump’s argument to engage China in a trade war. Last year (2018), U.S. exports to China were only US$130 billion while imports from China were US$505.5 billion, hence the US$375 billion deficit. In other words, China cannot match the U.S. by using tariff as a weapon alone.

 

But it’s also true the 24 states that depended heavily on Chinese import goods could suffer dearly effective September 1 because the escalation of trade tensions could have serious consequences for the economies of those states as products from China become more expensive overnight. More importantly, there is no immediate alternative to the “cheap” Chinese products.

China suffers too. But they could source imported American goods from elsewhere, such as soybean from Brazil. At the end of the day, it’s still about who “can withstand more pain”. It would be a different game plan altogether if the U.S. is another communist country like China or Russia, whereby Donald Trump does not need to seek re-election.

 

Other Articles That May Interest You …

• The Endgame Has Just Begun – Trump Calls Xi Enemy, Raises Tariff Rates & Orders U.S. Companies To Quit China
• China Hits Back – New Tariffs On $75 Billion Of U.S. Goods, Tariff On Cars Would Be As High As 50%
• Oops!! President Trump Accidentally Admits That Americans Pay For His Tariffs On China
• Trump Blinked Again – Postponed Tariffs On $300 Billion Chinese Goods Under The Pretext Of Saving Christmas
• China Strikes Back!! – Trade War Becomes Currency War After Suspends U.S. Agricultural Goods & Devalues Currency
• Economists Thought China’s Economy Depends On The World – But McKinsey Research Shows Otherwise
• What Trump Doesn’t Want His Supporters To Know – China Lowered Tariffs To Everyone Except The U.S.
• China’s New Message To The U.S. – “Negotiate – Sure!”, “Fight – Anytime!”, “Bully Us – Dream On!”
• China Reveals Strategy To Fight U.S. Trade War – Stop Buying American Debt

Tweet

September 3rd, 2019 by financetwitter

If you enjoyed this post, what shall you do next? Consider: