US-China Trade War Hurting Both Economies, Says Former Biden Economist

Trade Stalemate Between US and China

• 📌 The US and China are currently in a stalemate regarding trade, with neither side wanting to be perceived as initiating negotiations.
• ⚠️ The Biden administration believes that tariffs remaining in place are significantly harming the US economy and is interested in some form of rapprochement.
• 🤝 Both the US and China are experiencing economic harm due to the ongoing trade dispute, with both economies performing worse as a result.

China's Strategy and US Credibility

• 🧐 China appears to be betting on Donald Trump to eventually back down on tariffs, a strategy that has buoyed markets and raised hopes for a détente.
• 📉 The current tariff rates, some as high as 145% and 125%, are seen as illogical and are contributing to issues like empty store shelves and higher prices.
• 📉 The administration's credibility in negotiating and adhering to trade agreements is questioned, as seen in past interactions with countries like South Korea and Japan.

Challenges in Trade Negotiations

• 🚧 Trade wars are easy to start but hard to end, especially when a party lacks credibility in upholding agreements.
• 📝 Partners like South Korea and Japan have reportedly struggled to get clear instructions from the administration on what is expected in trade deals.
• 📜 The US's approach to existing free trade agreements, such as with South Korea (ROK) and Canada/Mexico (USMCA), raises questions about the value of signing new ones.