The Fin
Why Donald Trump & Xi Jinping will do a deal
Apr 23, 2025
Geoff Raby, a Financial Review columnist and former ambassador to China, shares his expert insights on the US-China trade war and its implications for Australia. He explores why both nations might strike a deal, despite ongoing tensions. Raby discusses the strategic responses from China and the evolution of trade dynamics, especially in solar energy. He emphasizes the importance of transparent leadership in Australia as the nation navigates its diplomatic stance between superpowers. The conversation sheds light on the complexities of international relations and economic impacts.
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Quick takeaways
- The U.S.-China trade war has led to significant tariff increases and a dramatic decline in China's exports to the U.S.
- Australia must navigate its economic dependence on China amid trade tensions while identifying opportunities in American products displaced by tariffs.
Deep dives
Impact of US-China Tariffs
The tariff increases imposed by the U.S. on China, specifically the 145% tariff on Chinese imports, have significantly affected the trade dynamics between the two countries. This has been characterized as an all-out trade war, leading to a decline in China's exports to the U.S., which dropped from 23% to 14% of total exports since 2018. While the U.S. focuses on its trade deficit and the hollowing out of its manufacturing sector, it overlooks the fact that China's economy also has strengths, particularly in the services sector. The imbalance in trade does not necessarily reflect unfair practices but rather differences in savings, investment, and production between the two economies.
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