Money & The Economy

‘Business As Usual’ Is Over — Trump’s Tariffs Lead American Companies To Move On From China

While the recent capitulation by President Xi Jinping has sparked a thaw in U.S.-China relations, experts contend that the relationship between the two countries is forever changed.

The G-20 Summit marked a big win for President Donald Trump. After a two-and-a-half hour discussion on Saturday, Chinese leaders agreed to dramatically increase purchases of U.S. agricultural, energy and industrial products. Additionally, China will further negotiate with their U.S. counterparts on intellectual property rights and trade secret theft — subjects the international community has long accused China of abusing.

In return, Trump will not move forward with a planed tariff increase on Chinese goods. The White House had slapped a 10 percent tariff on billions of dollars worth of Chinese imports in September, and the president had previously vowed to increase this rate to 25 percent. Instead, the administration is postponing the tariff increase for 90 days while U.S. and Chinese negotiators hammer out specifics in their new trade agreement.

The three-month negotiation could signal the end of the U.S-China trade war, but businesses on both sides of the Pacific are making longterm adjustments.

“Markets should be happy, in that the worst is postponed. But I don’t see the West ever going back to business as usual with China. Too many genies have been let out of bottles,” Fraser Howie, the author of “Red Capitalism,” a book detailing China’s financial rise, wrote to the Washington Post.

Howie is not the only one believes permanent change has been ushered.

“Both sides have set in motion policies that won’t be up for negotiation. So it’s not realistic to expect a return to the status quo,” stated Wendy Cutler, a former American trade negotiator. “We are in a new world.”

For years, American manufacturers relied on low-wage work in China to make a growing number of products to be sold in U.S. markets. The Communist country has returned the favor by investing over $140 billion into the U.S. economy since 2000. However, after a year of intense rhetoric and trade barbs, U.S. companies are reconsidering their dependence on Chinese factories. At the same time, Chinese government officials are spearheading efforts to develop domestic sources within their own borders.

While U.S.-China trade relations may become permanently altered, the administration contends that Trump’s tough stance is producing results.

“This was an amazing and productive meeting with unlimited possibilities for both the United States and China. It is my great honor to be working with President Xi,” Trump said in a statement Saturday. The president also announced on Sunday that China has agreed to reduce tariffs on U.S. cars exported into the country.

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