Trade wars produce “no winners”, American economist Carl Tannenbaum said in reference to the worsening trade dispute between the world’s two largest economies.
“China and the United States have actually grown pretty nicely together and up until recently the cooperation was working fairly well,” added Tannenbaum, chief economist of Northern Trust, an Illinois-based financial service company.
Politically and economically, the risks of a prolonged trade conflict are very high for both countries, and as a result, I would expect that the two sides could be back at the bargaining table before too long.
chief economist of Northern Trust
The economist said the world can't lose sight of the fact that it needs good relations between the United States and China – “economically and otherwise”.
“Politically and economically, the risks of a prolonged trade conflict are very high for both countries, and as a result, I would expect that the two sides could be back at the bargaining table before too long,” added Tannenbaum.
He thought that even though the attempt is not going to guarantee a resolution right away, it will bring the things back to a normal level. This would be much better for financial markets.
“The tariffs are one thing, uncertainty about the whole situation is another,” the economist said. He added that when facing uncertainty, businesses are reluctant to invest money in financial markets; supply chains on a global scale then have to be “re-thought.”
“Any decline in global trade will hit markets like this very hard,” Tannenbaum noted.
Any movements, such as relocating manufacturing plants, will make companies “less efficient and less profitable,” said Tannenbaum. He believes such moves cost consumers around the world more money as the items they buy become more expensive.
Tannenbaum said both sides had motives and incentives necessary to reach a solution. The key for both sides in the next one to two years is to “weather the storm of skepticism” regarding global trade.
“There will be positive movements before the end of the year,” he predicted. The economist explained that as Trump will be seeking a re-election next year, he will not be willing to resolve the dispute just yet.
“It’s one thing that he’s earning some points now for being tough, but being tough without being able to get anything done is probably not what he wants,” added Tannenbaum.
But he believes China also has “strong desire” to resolve the issue.
Tannenbaum anticipates negotiations between the two countries will start again “by mid-summer”. There could be some progress coming out of July’s G20 meeting. There, the two presidents “will meet together and probably have a private conversation”.
Copyright 1995 - 2019. All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily. Without written authorization from China Daily, such content shall not be republished or used in any form.
HONG KONG NEWS