U.S.-China trade war: USC experts explain escalation

May 14, 2019

The U.S.-China trade war escalated this week with President Donald Trump’s announcement that the U.S. will raise tariffs on $200 billion in Chinese imports and China’s response that it will impose new levies on $60 billion of American products. USC experts explain this new phase of the trade war and the expected impact on American consumers.

Contact: Jenesse Miller, (213) 810-8554 or jenessem@usc.edu

“Companies and consumers in China and the U.S. will suffer”

“The negotiations are not principally about current buying and selling but rather about the most important and potentially profitable industries of the future, including artificial intelligence, cloud computing, robotics and green tech. The worry is that if China can protect its companies from competition at home, it will be better able to compete with U.S. and other firms outside of China.

“It’s not possible to overstate the importance of U.S.-China trade to our two economies. While the current battle has already had a significant impact on certain industries in the U.S. and China, the long-term impact could be greater still and companies and consumers in both countries will suffer.”

Clayton Dube is director of the USC U.S.-China Institute, a program of the USC Annenberg School for Communication and Journalism which enhances understanding of complex and evolving U.S.-China ties. His recent commentary on the trade war is available here.

Contact: (213) 821-4382 or cdube@usc.edu

Who will blink first?

“The U.S.-China trade dispute initially stemmed from trade surpluses and intellectual property-related issues. However, it appears that both sides have dug their heels in and it has become a competition as to who blinks first.

“President Trump has the 2020 election looming and therefore is well-aware of the scrutiny by his constituents. President Xi Jinping has his reputation on the line before the Communist Party. Only time will tell the trajectory.”

Nick Vyas is director of the Center for Global Supply Chain Management at the USC Marshall School of Business.

Contact: (213) 821-4079 or nick.vyas@marshall.usc.edu

Who ultimately pays the price?

“Contrary to President Trump’s claims that the tariffs on Chinese imports are being paid by the Chinese, they are in fact being paid by U.S. importers (e.g.: businesses, manufacturers, retailers etc.) and ultimately U.S. consumers. The latest round will have a more direct and significant impact because the types of goods subject to the higher tariffs are either inputs for or actual consumer goods – everything from bicycles to vacuum cleaners. China’s retaliatory tariffs will hurt U.S. exporters as well.

“The escalating tariff war also has an impact on our local economy – in particular our Los Angeles and Long Beach ports, because China is the largest volume two-way trading partner for both. International trade through both ports supports approximately 190,000 jobs in the L.A./Long Beach area, and approximately 992,000 jobs in the five-county region.”

Brian Peck is an expert in international trade, trade agreements and globalization and director of the Transnational Law and Business Center at the USC Gould School of Law. He recently spoke about the US-China trade war at a roundtable discussion available here.

Contact: (213) 740-2563 or bpeck@law.usc.edu