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Abacus | One country is winning the trade war. It’s not the US and it’s not China
- US President Donald Trump once claimed that trade wars are ‘good and easy to win’, yet in his tussle with China the data appears to be proving him wrong
- That’s not to say there haven’t been any winners, though – they just might not be the ones you would think
Reading Time:4 minutes
Why you can trust SCMP
Donald Trump says “trade wars are good and easy to win”. Conversely, orthodox economists like to say that in trade wars, there are no winners. Strictly speaking, neither view is correct; things aren’t that simple.
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The agreement between Trump and Xi Jinping in Osaka last month to put further tariff increases on hold and to resume bilateral negotiations amounts to a ceasefire which marks the end of the first round of the US-China trade war. So this is a good time to look at how the conflict has played out so far and to examine who, if anyone, is winning, and who is losing.
First, let’s look at the United States, which continues to levy tariffs of 25 per cent on some US$200 billion of imports from China.
According to a group of eminent economists, including International Monetary Fund head of research Gita Gopinath, almost all the cost of those tariffs are being borne by US businesses, through lower margins, or by US consumers, in the form of higher prices.
If true, that would make the US a clear loser in the trade war. Except it is very hard to see the effect in US economic data.
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