I spent a good part of last Friday at Wellington Management in Boston focused on the global markets, trade, tariffs and what could become a protracted and heated exchange between the U.S. and China. It is clear that there are a variety of factors that could contribute to an escalation in the current spat between China and the United States. It is important to note that the proposed tariffs from both sides have already expanded dramatically from several industries to several hundred products on a list that is still growing. It is worth framing the size of our current China trade and recognizing their ascent in recent years to become a dominant global exporter.
The raw numbers tell the story. In 2002, China exported in dollar terms $327 billion in goods. Their exports grew from 2002 to 2012 at an impressive 17% annualized rate. Today China ranks #1 in exports of goods and services globally, exporting $2.1 trillion in U.S. dollar value. Putting that number in context, the U.S. is the largest importer with a current value of $2.25 trillion annually. The sheer size of the China/U.S. trade dispute commands a top media billing. The President is correct in being out front on this issue. His format and his delivery certainly rarify the atmosphere around the negotiations.
*I have included a comprehensive analysis of the discussions to date and commentary on the potential pitfalls in our country’s strategy written by Joseph E. Stiglitz, Nobel Laureate and Distinguished Professor of Economics at Columbia University Trump's Trade Tango