China and USA Trade War Truce on the Horizon? New Proposal Could Peacefully Settle the Issues?
The American and Chinese Trade War has been going on for a while and has been well publicized? Many on both ends of the political spectrum have questioned the Presidents rationale in taking on the fasted growing economy in the world. At one stage things came to a head, both countries were warning the other of severe repercussions that would follow any further escalation. However, that threat seems to be passed as the latest announcement says that the Chinese government has proposed to spend heavily into buying goods made in the U.S., as a countermeasure to reduce and hopefully eliminate the existing trade gap.
According to reports China is planning on spending more than $1 Trillion on the US made goods that will help drastically reduce the US Trade Deficit. This is seen as reciprocation to the olive branch proposed by the US. It is believed that the US administration was planning to lift some of the tariffs to ease and de-escalate the ongoing trade war.
Chinas Long Term Solution.
According to reports by a news outlet, Bloomberg, China has proposed to increase their purchase of U.S. goods over a period of time to help balance the trade sheets. They intend to do so by incrementally increasing their annual imports over the next six years. However, if the US is to reduce their trade deficit to zero by 2024, it would need China to spend upwards of $1 trillion in US goods.
The governments of both nations have been playing a game to see who blinks first. The Trump administration had fired the opening salvo last year when they imposed duties to the tune of about $200 billion on Chinese goods. When China responded in kind, the US government threatened them with more tariffs. The issue only began losing steam in December when the leaders of both nations, Mr. Trump and Mr. Jinping, met at the G20 summit in Argentina and spent time discussing the ongoing issue.
Last month, delegates from both countries met last month in order to de-escalate the issue. A major win was the hard-fought truce to allow both countries to ponder over their options. Since then, talks over trade issues has been progressing rather well. So much so that the US is looking at the option of removing the tariffs imposed earlier, to give China a bigger incentive to negotiate a new deal.
According to reports from Bloomberg, yesterday, last week the trade delegation of America and China met where the Chinese mission, reportedly, agreed to buy more U.S. farm and agricultural products as well as allow more access to Chinese markets.
This sort of cooperation bodes well for the two superpowers, while there is a lot of drama surrounding Huawei Technologies Corp, and the accusations of spying. This is certainly a positive step in the right direction. It still needs to be seen if these steps can lead to a fruitful result and Mr. Trump can prove his detractors wrong by showing them the art of the deal.