China And The United States Reach A New Trade Truce

China And The United States Reach A New Trade Truce

The highly anticipated meeting between Chinese President Xi Jinping and his US counterpart Donald Trump at the G20 Summit in Osaka had led to a new trade truce. Apart from Trump’s promise for no new tariffs on US$300 billion worth of Chinese products, he has also agreed to lift the ban on selling components to Huawei, as long as the sale of these components would not pose any threat to the national security of the country. In return, China has agreed to purchase from the US a “tremendous” amount of goods in order to reduce the US-China trade deficit. There are no specific details nor deadline given about the goods to be purchased by China. To find out more about the G20 Summit, you may sign up for economics tuition Singapore with a reputable economics tutor Singapore. Mr Edmund Quek is the principal economics tutor Singapore of Economics Cafe Learning Centre, the best economics tuition Singapore centre.

Ban on US Firms Selling to Huawei

A ban was announced in May forbidding American firms to sell to the Chinese technology giant Huawei, which had been sourcing key smartphone components from its American business partners. Trump’s latest decision to lift the ban will offer a temporary relief to both Huawei and its business partners in the United States. However, Huawei products, especially mobile phones which have gained increasing popularity internationally, are still banned from the US market. With guidance from your economics tutor Singapore in your economics tuition Singapore class, discuss the implications of the lift of ban on Huawei and its business partners in the US.

According to Trump, the Department of Commerce will convene on 2 July 2019 to discuss the details related to this matter. Prior to that, analysts cautioned against too much optimism. It may look like a temporary bail-out for Huawei. However, with no confirmed details about the terms and conditions, the deal can be retracted any time. Given Trump’s poor credibility and track record, it is just a matter of time that he flip-flops again with another ban. You may discuss with your economics tutor Singapore in economics tuition Singapore the significant role that Huawei plays in China’s rising telecommunication industry.

No New Tariffs on Imported Goods from China

The United States has imposed tariffs on US$250 billion worth of goods imported from China. China retaliated with tariffs on US$110 billion worth of US goods and threatened to put in place qualitative measures against US companies operating in China. You may consult your economics tutor Singapore in your economics tuition Singapore class the intended effect of these qualitative measures. A deal on no additional tariffs will be welcomed by consumers and firms in both countries. No matter whether the tariffs are imposed by the US or China, the cost of tariffs will be shared by consumers and firms of both countries. The extent of impact will be dependent on the price elasticity of demand and supply. To learn about the concept of price elasticity of demand and price elasticity of supply, sign up for Mr Edmund Quek’s economics tuition Singapore today. You may visit his website at www.economicscafe.com.sg to check on the economics tutor’s economics tuition Singapore class schedule. For example, for the necessity goods imported from China, of which, the demand is not price elastic, the additional cost as a result of tariffs imposed on these goods will fall more heavily on the US consumers than the Chinese firms.

In return of no additional tariffs and the lift of ban against Huawei, the US hopes to receive from China an order of over 500,000 metric tonnes of soybeans, among other US farm goods. It is reported that the Trump administration has spent billions of US dollars in compensation to the US farmers, the party expected to have suffered most from the ongoing US-China trade war since last year.

Linda Geng

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