Tom Orlik, chief economist at Bloomberg Economics and author of "China, The Bubble That Never Pops," discusses the implications of Donald Trump's election on trade dynamics and US-China relations. He delves into the complexities of imposing tariffs on Chinese imports and their potential economic fallout for both nations. Orlik also examines the Federal Reserve's independence amid political pressures, shedding light on how these dynamics could shape future economic policies. The conversation hints at a possible US-China standoff with significant repercussions for the global economy.
Proposed tariffs up to 60% on Chinese imports could disrupt supply chains and threaten U.S. corporations if enforced.
China's economic growth may remain resilient despite tariffs, driven by government stimulus and advances in technology and sustainable energy.
Deep dives
Implications of Tariffs on U.S.-China Relations
The potential for steep tariffs under the new U.S. administration raises significant concerns regarding the economic relationship between the U.S. and China. President-elect Trump has proposed tariffs as high as 60% on Chinese imports, which could have devastating effects on China's small manufacturers, whose profit margins are already thin. While previous tariffs of 25% did not appear to substantially harm the U.S. economy, an increase to 60% would likely lead to significant financial strain on major corporations with supply chains affected by such measures. Economists suggest that the proposed tariffs may serve more as a negotiation tactic rather than a definitive policy, highlighting the complexities of the tariff landscape in upcoming negotiations.
The economic forecasts for both the U.S. and China are clouded by the uncertainty surrounding potential tariffs. Analysts indicate that China could see a growth rate of around 4.6% in the coming year, influenced by government stimulus effectively counteracting the challenges posed by tariffs. Conversely, U.S. growth is projected to hover below 2%, with tariffs expected to exert minimal negative impacts if introduced strategically throughout the year. The timing and nature of the tariffs will play a pivotal role, dictating whether they result in major economic repercussions for either country.
The Evolving Landscape of U.S.-China Economic Policy
The U.S. protectionist stance appears to be ineffective in curbing China's technological advancement, as reports indicate that China's challenges are primarily domestic rather than a direct result of trade policies. Despite apparent setbacks in certain sectors like real estate, China is making notable progress in technology and manufacturing, particularly in electric vehicles and sustainable energy solutions. The ongoing economic rivalry suggests that while the U.S. currently holds an edge, the competition between the two nations remains dynamic and far from resolved. Analysts predict that the outcome will depend significantly on the strategic choices made by U.S. policymakers and how China responds to ongoing pressures.
President-elect Donald Trump's sweeping election victory and cabinet appointments point to more protectionist policies and market volatility, with broad implications for Asia. China is firmly in the crosshairs, but previous US efforts to contain its advance -- particularly in technology -- have largely faltered, according to Bloomberg Economics and Bloomberg Intelligence.
Tom Orlik, chief economist at Bloomberg Economics in Washington, D.C., joins John Lee and Katia Dmitrieva to outline what the next four years may bring for the global economy and US-China relations -- and the potential risks.
