US: Will it pull out of the World Trade Organization? – Nomura

Takahide Kiuchi, Executive Economist at Nomura, suggests that if the US imposes the additional tariffs on China, US consumers are likely to take a big hit from rising prices.

Key Quotes

“We would therefore hope that stronger opposition from US corporations, farmers, and consumers will prompt the Trump administration to pull back from its policy of escalating the trade war with China.”

“The root cause of US-China trade frictions would appear to be the US’s strong concern that it will be overtaken by China on the economic front, especially in advanced areas. The US also is increasingly worried that China will eventually surpass it in military might.”

“The US-China trade war therefore probably will not end as long as the US remains concerned about China’s rising economic and military power. Many countries have filed complaints about US tariffs with the World Trade Organization (WTO). Meanwhile, some observers think the US could pull out of the WTO, which it views as infringing upon its sovereignty. If that were to happen, the post-World War II free trade system established under US leadership would most likely be dealt a devastating blow.”