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Is the US Trade War with China Close to Ending?

The long-running trade war between the US and China has been blamed as being one of the key factors in the recent economic slowdown. However, hopes have been raised recently that the end of the dispute may be in sight.

The Background

With both of these countries aiming to be the world’s leading economic power, they have got caught up in a series of measures aimed to damage the other. Increasing tariffs, trade barriers and other issues that hurt the economy have been going on since 2018.

The matter first came out in public in 2017, when the US Government accused the Chinese authorities of employing unfair trading practises.

Throughout 2018, President Donald Trump announced tariffs on imports such as solar panels, washing machines, steel and aluminium. The Chinese responded by putting their own tariffs on American products like cars, pork, fruit and airplanes.

In the last month or so, both sides have announced a further round of measures that are designed to increase the pressure on the other side. This has led to fears that the trade war could lead to a global recession. At times like this, nervous businesses around the world tend to focus more on matters such as international commercial debt collection, to avoid their own financial issues.

Who Is Winning the War?

At one point in 2018, Trump claimed that trade wars are “easy to win”. However, more recently he has been less positive, saying that the dispute with China was never going to be easy. The truth is that both countries have suffered due to this war, which has also had a negative market on stock market in other parts of the planet too.

In China, the Yuan is as low as it has been in over a decade. Equity markets in the Asia-Pacific region have also been suffering due to low confidence levels among investors. The effect in the US has been negative as well. Despite other areas of the American economy looking strong, fears over this trade war have caused stock market investors to get nervous, leading to the markets stuttering.

What Hope Is on the Horizon?

Recent comments by Trump suggest that there might be hope for a breakthrough soon. The US President stated that he had received a call from China and that they “want to make a deal”. He went on say that the Chinese want to “make a deal very badly”.

This news helped to push up shares around the world. The immediate reaction in markets from Europe to Asia was that this is a positive sign, as stock markets began to recover some of the value they had lost. Safe haven assets like gold lost some of their earlier gains. It remains to be seen if this is really a breakthrough, though. Contradictory statements from both countries have muddied the waters before.

 The comments from Trump came just days after the Chinese had announced new tariffs of up to 10% on $75 billion of US goods. The US responded by promising to raise their own tariffs on $550 billion of imports from China. It could be that the leaders on both sides have realised that the matter is beginning to spiral out of control and needs to be sorted out.