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Is the World Ready? Trump’s Trade Policies Could Spell Disaster

Daniel Kim Views  

According to maritime shipping data, Donald Trump’s potential reelection could threaten global trade. Some speculate it would be more detrimental to China than during his first term.

The Financial Times reported that Guy Platten, Secretary-General of the International Chamber of Shipping (ICS), representing 80% of the world’s shipping vessels, noted, “The world order has never been under such threat since before the Second World War. When we last did this, it didn’t work . . . Trade wars lead to war.” He added that Chinese shipowners “are really worried about the potential of tariffs to be placed on Chinese-built ships.”

According to data compiled by Geneta, trade between China and the US surged from January to May this year, restoring to post-COVID-19 levels. Experts analyzed this as a preemptive move in anticipation of Trump’s 60% tariff policy. They warned that US Sanctions targeting China’s companies would increase demand and prices for South Korean and Japanese vessels, leading the US to spend the costs exceeding the tariffs’ benefits.

Analysts expect China to suffer more economic downfall than the US. The Wall Street Journal (WSJ) forecasts Trump’s second term will be more impactful than his first. Furthermore, China’s economic growth rate will vary based on US tariff policies. Patrick Schwafel, Chief Economist at Pictet Asset Management, estimates that if Vice President Kamala Harris continues President Joe Biden’s selective tariff policies, China’s growth rate could drop by 0.03 percentage points next year. Conversely, if Trump raises tariffs on Chinese products by 60%, the decline could increase to 1.4 percentage points, lowering the growth rate from an initial forecast of 4.8% to about 3.4%.

Similarly, as pessimism continues regarding the Chinese economy, foreign direct investment in China is expected to turn negative for the first time this year. On August 12, Bloomberg reported that the State Administration of Foreign Exchange of China noted a nearly $15 billion decrease in foreign direct investment debt from April to June. Even during the first half of the year, there has been a $5 billion decline. If this trend continues, foreign direct investment in China is projected to be negative this year for the first time since 1990.

Daniel Kim
content@viewusglobal.com

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