Tariff increases will drag down global economic recovery

The US side recently raised its tariff on 200 billion US dollars of Chinese imports from 10% to 25%. In response to this unilateralist act of the United States, all parties generally hold an opposing position, believing that the imposition of tariffs will not help solve the problem, and will bring negative effects to the world economy.

European media believe that the U.S. government's reversal not only lifts the stone and throws itself in the foot, but also drags down the global economic recovery, and there will be no winners in trade disputes. According to the European Times, the BBC quoted trade policy experts from the Center for Strategic and International Studies of the United States as saying that China will never meet the irrational needs of the United States. President Trump will eventually understand that China will not give him everything he wants. Trump also faces a dangerous political situation in which he is rejected for failing to reach an agreement.

Reuters article after a detailed analysis of the U.S. tariff operation mode, said that the U.S. government tariffs are not paid by the Chinese government or companies located in China, the actual tariff payers are importers of Chinese goods, usually U.S. companies or foreign companies registered in the United States, importers usually transfer tariff costs to customers, most of them. American manufacturers and consumers.

Swiss Perspective magazine recently published an article that as two major global economies, China and the United States are closely related to global investment and consumption, and the escalation of economic and trade frictions between the two sides will further drag down the global economic recovery. Since 2018, market fears of a global recession have lingered. If Trump fulfils his threat, it will exacerbate global investors'pessimistic expectations of economic prospects, and the instability of global stock and financial markets will intensify in the short term.

Japanese economist and senior researcher of Canon Global Strategic Institute, Seikou Qing, believes that China has been fully open in the tide of world economic liberalization, especially after its accession to the World Trade Organization, actively accepting foreign investment, and its economic and trade structure has undergone fundamental changes. China and the United States benefit from the open development of the world economy. Nowadays, many of the goods imported from China to the United States are products of American investment enterprises in China. American investment in China is profitable and achieves real mutual benefit and win-win situation.

Seikou Qing believes that if sanctions, counter-measures, re-sanctions, re-countermeasures and other measures are reciprocating, the worst result will be that the United States imposes taxes on all Chinese goods imported into the United States, and even lead to a complete separation of the Chinese and American economies. As a result, American firms investing in China will fall into bankruptcy and bankruptcy, financial institutions will restrict credit to these firms, and financial markets will be chaotic as a whole, leading to global currency fluctuations. Under such circumstances, the economies of China, the United States, Japan and other countries with better economic fundamentals can maintain relative stability, but the financial markets of more countries will be impacted, and even the exchange rate will fall sharply, which will affect the major financial institutions of the world closely related to these countries and eventually lead to a global financial crisis. At the same time, Japan and the United States may also fall into negative growth, which will be the worst result. Under normal circumstances, when such a crisis is forecasted, relevant countries and international economic organizations will take measures to prevent the situation from deteriorating. But the focus of the earthquake is the U.S. government, so the development situation is difficult to predict. Seikou hopes not to have such a worst-case outcome.

Seikou Qingzhi believes that while China is forced to take counter-measures against the United States, it is accelerating the pace of domestic reform, including strengthening intellectual property protection through legislation, stopping compulsory technology transfer, narrowing the gap between state-owned enterprises and private enterprises, and narrowing the gap between Chinese and foreign investment. In particular, he pointed out that China's reform measures are timely, because they are easier to implement in the mid-high-speed development. In the first quarter of this year, China's economy began to rebound, more than expected. Thanks to China's active policies of increasing credit for private enterprises, promoting consumption of automobile and household appliances and increasing public services, China's national income has increased and consumption has been upgraded. China's consumer industry and businesses have maintained a good momentum of development. At the same time, China's efforts to prevent and control financial risks, speed up poverty alleviation and improve the business environment are also progressing in an orderly manner.