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Likely Developments in Sino-US Trade Relations in the Midterm Elections Year: Investigations and Altercations

[ April 5, 2018   //   ]

Trade tensions are heightening between the US and many of its largest trade partners. While this extends to its almost traditional sparring with mainland China, it has also embroiled a number of nations normally seen as allies, including Canada, Mexico and the EU. Overall, the persistent adoption of provocative tactics and the use of confrontational language on the part of the Trump administration – together with the recent punitive tariffs introduced for imported washing machines and solar energy equipment, as well as the similar action being taken against overseas-produced steel and aluminium products – has triggered international concerns over growing US protectionism.
A number of other issues have also added to worries that the US might be looking to export all of its economic woes to other nations. Most notably, this has been spurred by the recent and wide-ranging overhaul of US tax legislation, as well as moves to widen the remit of the Committee on Foreign Investment in the United States (CFIUS), the body responsible for reviewing any mergers, acquisitions or takeovers likely to result in a US business coming under overseas control.
The Bulging Trade Deficit
There is seemingly a consensus among government officials, lobbyists and the US business community that Sino-US trade relations will be, at best, “choppy” in 2018. Inevitably, the tensions between the US and any country that contributes to its ballooning trade deficit are always heightened during an election year. In 2018, this will be particularly true as the midterm elections will take on an enhanced significance, not just with regard to the future of the Trump presidency, but also with regard to the American trade landscape for many years to come.
Ever since 1975, the US has maintained a significant overall trade deficit, despite having had a positive services trade balance since 1970. The most disturbing aspect of this has been the fact that the goods-related trade gap has continued to grow, ballooning to US$810 billion in 2017, the fourth-highest figure in US history. Particularly politically-sensitive is the trade deficit with mainland China, the US’s largest single creditor. With this shortfall standing at US$375.2 billion in 2017, China’s share of the US’s overall trade deficit in goods soared to 46%, compared to 32% back in 2007.

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