With the COVID-19 outbreak intensifying in an unexpected way this year, countries around the globe are being forced to side-line domestic and foreign agendas they battle the outbreak of the virus which has so far claimed thousands of lives globally.
In terms of the issues which have taken a back seat, the most interesting one is the US-Sino trade deal which had been dominated market interest until the virus took hold. Following the January 15th signing of the phase one US China trade deal in Washington the two sides were expected to announce scheduling for the next round of talks due to start shortly after that signing. However, by the end of January as the COVID-19 outbreak started to take centre stage, the extent of the issue in China was becoming clear.
With all 31 of China’s provinces noting infections and the death toll soaring by triple digits each day, the Chinese government became consumed with tackling the outbreak. This obviously left little room for progressing the trade talks.
Global Crisis Unfolding
Fast forward six weeks to now and the situation has become so severe that America is now in the midst of a full scale war against the virus with the President declaring that all European travel to the US (besides those coming from Ireland the UK) will be banned for 30 days.
Central banks have been rallying in unison to help address the situation with a slew of G10 central banks announcing rate cuts over recent weeks and more expected to follow in the weeks to come. As equities and commodities prices plunge, the full economic impact of the situation is becoming gruesomely clear with man indexes down between 20% and 30% and many banks warning over the prospect of a global recession, the rhetoric between the US and China has died down.
Pressure For US To Remove China Tariffs
There is now growing pressure among the business, finance and political communities for the US to roll back further tariffs on US goods, beyond those included in the phase one trade deal. Anti-tariff lobbyists are calling for the US to help alleviate the pressure on consumers and businesses.
There are currently still tariffs of as much as 25% on around $ 370 billion of Chinese goods. According to data, US importers were billed for $ 48.1 billion on the year under the “Section 20” tariffs installed by Trump. However, US Representative Stephanie Murphy explained to Reuters in the week that as this tax sits within the control of the executive branch, it can very quickly be removed, effectively giving a tax cut to US businesses and consumers.
Will Trump Concede?
Following a meeting this week between lobbyists and US Trade Representative Robert Lighthizer, the USTR is said to “not be receptive to the idea”. However, as the economic fallout worsens, the US might be forced to remove some of its actions against China with a view to helping the world economy. The key obstacle to this will be Trump himself. The President has been outlining his harsh stance on china as one of the key differences between himself and Democratic challengers and so will be reluctant to give that up.
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