The political economy of Washington’s trade policy and Make America Great Again strategy means reaching resolution with trade partners will be difficult, suggests the research team at ANZ.
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“From a geostrategic perspective, it competes with Beijing’s Made in China 2025 road map for economic development. The US regards its intellectual property as the foundation of its economic future and is troubled that Chinese business practices are being used unfairly to transform China into the world’s dominant high tech powerhouse.”
“How the geopolitics of trade between China and the US unfold in coming months will be critical for financial markets.”
“There are some early signs that tremors may be emerging. The CNY has weakened recently, reversing this year’s appreciation.”
“The deepening US trade dispute also extends to Europe. The US’s ongoing investigation into the European Union’s car industry risks an escalation in trade friction in the world’s largest bi-lateral trading relationship.”
“It regards US action as protectionist and contrary to WTO rules. It is that which led to retaliatory tariffs of EUR2.8bn on US imports with potential for a further EUR3.6bn to come in the future (three years).”
“This is not a situation that the EU wants.”
“A major risk to the trade environment therefore comes from the breakdown in established bilateral and multilateral channels of communication.”
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