'Saxo Bank' Specialist: “Ordinary citizens will suffer from US-China trade war”

Baku. 18 July. REPORT.AZ/ These tariffs set by Trump have primarily been used primarily to affect China’s exports with additional products and possibly countries in the pipeline under the current administration. Report informs Specialist at Saxo Bank Andrea Spinozzi said.

China is the number one trade partner globally for the United States, accounting for an average 45% of the US trade deficit since 2009 (and 36% since 2001, when China joined the WTO). However, despite China’s 2011 induction into the WTO and the subsequent ballooning of trade between the US and China, a trade war between the two most economically intertwined superpowers can only work to slow the growth of trade; it cannot stop the continual march toward globalization and free trade. The International Monetary Fund states that a fully symmetric retaliation (i.e. a border adjustment tax) in a trade war is completely neutral based on a recent study, but retaliation exclusively through import tariffs can have an adverse effect on world trade and result in a fall in world GDP. Average citizens (of each country!) are the losers during these altercations as they must shoulder the economic and social costs of increased tariffs. These two economies will experience cost-push inflation as the factors of production using imported goods will become more expensive, thus decreasing aggregate supply and forcing the price up. However, the prudent investor can utilize this unique time in global trade history to position their portfolio to capitalize on – and defend against – the effects of these] two superpowers posturing for a total trade war.