US Commercial Future: Relations with China, Canada, and Mexico pending further international negotiations and in Washington
Apple products are not going to be much more expensive immediately, as was feared until recently. Neither components that are used in cars or appliances, or clothing or toys that bear the seal of “Made in China” on the label or on the bottom of the glass or the back of the plate, among others.
After a long disagreement between the US and China, the presidents of both countries, Donald Trump and Xi Jinping, respectively, signed a 90-day truce in a parallel meeting to the G20 summit in Argentina this weekend. your business relationships. On them still hangs the threat of increases in tariffs on Chinese exports and, in response to these measures, reprisals by Beijing.
Currently Chinese products worth about $ 267,000 million are subject to a tariff or 10% tariff and Trump threatened to raise them to 25% on January 1 if China does not matter more from the US, it is committed to respecting intellectual property protections, transfers of technologies, eliminate non-tariff barriers to trade and prosecute cybercrime with greater zeal, among other issues.
The US has already imposed tariffs of 25% on the import of steel and aluminum to its trading partners and these have responded with similar currency increasing the risk of a global trade war.
It is an open battle for the Trump Administration that is protecting and benefiting the US steel industry but, in turn, is hurting manufacturers (whose intermediate import products are more expensive) and farmers who are having difficulties selling their crops , meat and dairy products for the reprisals taken by China, Canada and the EU among other countries to respond to the White House policy.
Farmers in the American Midwest are letting some crops rot because they do not sell them and the cost of storing them is too high. The Federal Reserve of Minneapolis has detected an increase of the bankruptcies of the farmers of the North zone of the Midwest for a series of reasons that include the lack of exports. It is feared that the sharp increase in bankruptcies has not reached its highest point.
Now the US and China, which has committed to making more purchases of American products, have been given three more months to negotiate what they have not been able to do for two years.
The second term on which a large part of the global trade flows depends is another term. Six months.
During the return trip of the G20 summit, Trump informed that it is going to withdraw from Nafta or TCLAN, the trade pact between Canada, the US and Mexico closed in 1994 to replace it with the new agreement principle signed on Friday after a dispute. negotiation with its southern and northern partners.
The president said he would give Congress six months to approve the new agreement, called the USMCA. In the event that the Democratic majority that will control the House of Representatives from January does not give the green light to the text of this agreement, the previous rules will be applied to NAFTA to govern trade among the three countries.
It is something that would break the foundations of a good part of the economy and, according to analysts, would have very serious consequences for small and medium-sized companies of the partners in the agreement.
It is also a pulse with the new Congress in which Democrats have many of the keys to what can be legislated or not. The leader of the Democrats, Nancy Pelosi believes that the agreement signed with Canada and Mexico still needs a lot of work in terms of protection of wages and environment and Richard Trumka, leader of the union confederation AFL CIO explained that “it is still far from finished the work to fix the Nafta “(an agreement that never pleased him).
From the unions, it is noted that the dispute resolution mechanisms are very weak in USMCA.
Trade agreements that allow reducing barriers to the exchange of goods and services have contributed very much to the improvement of the world economy and much of the economic scaffolding of the 21st century is built on these premises. Turning them around can be a dangerous journey for the prospects of the global economy.
The G20 communiqué, one of the texts in which language is most carefully taken care of to avoid disagreements between countries with different political, economic and priority systems, makes only a brief and almost decontextualized mention of trade. Although in other international and American forums a rupture of the already established rules to facilitate the signature of the USA is mentioned, it is vaguely said that “problems in the trade have been appreciated nowadays” and that the World Trade Organization or WTO must be reformed.
What Is the G20?
The G20 is an international forum of countries with large economies founded in 1999. There are 19 countries and the EU as well as Spain as a permanent guest but not a member, representing 90% of world GDP. Since the Great Recession in 2008, its role was strengthened to establish lines of action in recovery, fiscal affairs and other aspects of globalization.
Their communications are usually very vague to be able to unify postures that in many aspects are distant so their effectiveness is questioned frequently.
What Has Been Agreed?
The diplomatic language and the need for consensus have weakened several of the 30 points of a statement in which tiptoe on the question of trade, the issue of refugees (which agreed to work on the roots of the problem and provide assistance humanitarian) and consolidates, however, the Treaty of Paris to combat global warming of the planet. This is a point where the US does not participate since Trump says he does not believe in the report prepared by his own government in this delicate problem. And it is an exception that includes a statement that also talks about technology, its progress and challenges, and gender equality.
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