by MARK WEIBROT & GERALD EPSTEIN
As stock markets around the world are reeling from contradictory Trump administration signals regarding US policy towards China, we look at: Who benefits? And: What would a better trade policy towards China look like? CEPR’s Mark Weisbrot and PERI’s Gerald Epstein discuss the issue
GREG WILPERT: It’s The Real News Network and I’m Greg Wilpert.
Stock markets in the U.S. and around the world have been involved in a rollercoaster ride over the past week. One of the main reasons for the ups and downs are said to be the uncertain trade negotiations with China. As a result, almost all of the stock market gains that have been made in 2018 were wiped out in the last two months. Another factor that threw a wrench into China-U.S. trade negotiations this week was Wednesday’s arrest a Chief Financial Officer of Huawei, the Chinese telecommunications company. Canadian authorities arrested Meng Wanzhou in Vancouver on Wednesday at the behest of the U.S. government.
Exactly why she was arrested was not clear, but there is speculation it has something to do with allegations that her company, Huawei, violated U.S. sanctions against Iran. Regardless of the reason, what this arrest shows is U.S.-China relations are in an extremely volatile moment where anything can happen it seems. Joining me now to analyze U.S. trade policies toward China are Mark Weisbrot and Gerald Epstein. Mark is a Codirector of the Center for Economic and Policy Research in Washington, DC, and Jerry is the Codirector of The Political Economy Research Institute and Professor of Economics at UMass Amherst. Thanks for joining us again, Mark and Jerry.
MARK WEISBROT: Thank you.
GERALD EPSTEIN: Thanks, Greg.
GREG WILPERT: So I want to start with this most recent news about the arrest of Meng Wanzhou, Huawei’s Chief Financial Officer. Stock markets around the world reacted very strongly to her arrest, dropping by as much as 2 percent, implying that investors believe that her arrest bodes badly for U.S.-China relations and for the trade negotiations that are supposed to happen between the two countries over the next three months. The reasons that these negotiations are so important is because the U.S. and China are effectively engaged in a tariff war. The Trump administration has stopped a 10 percent tariff on 200 billion dollars worth of Chinese imports, and China has reciprocated with tariffs on 110 billion dollars of U.S. imports. Now, negotiations are on to find an agreement by March 1.
So the question here is, who benefits? That is, what sectors of U.S. society stand to benefit from these actions of the Trump administration and these tariffs? Let me start with you, Jerry.
GERALD EPSTEIN: Well in fact, in the short run, I don’t think anybody’s really benefiting except for those who are trying to drive a wedge between China and the United States. That is, there are groups within the Trump administration who are hawks on China and have been so for a long time. And for them, this is mostly an international political strategic military strategy to try to prevent China from being a strategic enemy of the United States. There are those who are hoping in the longer run they will benefit. U.S. businesses who are operating in China really want the Chinese to give some concessions to them to let them have more access to the markets, including financial services, businesses. High tech businesses are concerned about China stealing high tech secrets and so forth.
So they’re not benefitting yet. China has not made any concessions, and it could go much worse for them. But they could benefit if China caves in. U.S. workers aren’t going to be benefiting at all, I don’t think, because most of what the Trump administration is pushing are for concessions to U.S. business. So it doesn’t seem like U.S. workers have much hope in benefiting at all from this.
GREG WILPERT: Mark, what do you say? What do you think about what Jerry said, and also in general, who benefits and who suffers from these Trump tariff policies and trade war?
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