User:Pdarveau/huso-topic-sm2

tariff wars between America and other countries

Tags: Trade, tariffs, international policy

Trade relations between the USA and countries like China and Brazil have always been contentious -- but especially so in wake of the numerous global conflicts plaguing the globe. Between the US and China, two of the world's largest exporters of goods, industries like agriculture that strongly rely on the trade relationship have been impacted by imposed tariffs. This has reduced the competitiveness of US products, leaving American farmers and manufacturers vulnerable to losing market share to countries like, for example, Brazil.

Contextually, post-pandemic, the situation between the US and China is as follows, as dictated by the IMF: China’s surplus reflects high domestic savings amid weakened demand, while the U.S. deficit stems from strong demand and low savings. The report suggests that both nations need domestic reforms rather than external adjustments to address imbalances, emphasizing that industrial policies have limited overall impact on trade balances but may influence specific sectors

This circles back to the main issue of diversification. One of the most major government responses to the inequalities between the US and China is that the US export market is overly reliant on China. As a response, the US Department of Agriculture has promoted US crops and agriculture to new markets, like South America, and Europe, to create alternative buyers. The adverse effect would occur if higher tariffs were imposed on Chinese goods. China would likely cease trading and getting goods from the US, cheapening Brazilian agriculture against the US.

This ties to the idea of balancing diplomatic efforts with tariff policies. An example of this is the US-China Phase One Trade Agreement. Signed by Trump in early 2020, the deal required China to purchase more American agricultural and manufactured goods. If it were not for the pandemic, the deal would have set realistic targets for China to fulfill when purchasing US goods. However, the deal was disrupted, and is still not operating at full capacity under the Biden administration.