US trade war against China: Shooting at the wrong target?

March 21, 2018 – The French financial group Natixis last week reported that, while an imposed tariff of 10-25% may look relevant on the surface, the targeted approach on steel and aluminum may not be the right way to go, even for the US. “To start with, (the tariffs) do not even hit the key products behind the US trade deficit with China,” Natixis says.

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“The key products that help China to hold such a massive such trade surplus with the US are electronic products (i.e. telephones, data processing machines and communication apparatus) and traditional labor-intensive products such as toys, furniture, footwear and plastics.

Both types of products are hard for the US to target in a trade war for two reasons.

The former is an integral part of the US production chain so that increasing import tariffs would only increase the cost of production and reduce the competitiveness of the US.

The latter type of products cannot be produced as cheaply in the US so tariffs will only hurt American consumers.
Assuming that all aluminum and steel related products are included, they would only constitute 2.88% (for steel) and 0.54% (for aluminum) of the US deficit against China.

It seems the US Administration keeps on shooting at the wrong target.” www.natixis.com (ATI).

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