Channel NewsAsia’s current affairs programme Insight, examined the impact on Asia and the world due to the recent tariffs imposed on imported washing machines and solar panels by US President Donald Trump, and whether a trade war was looming on the horizon between the US and China. Insight noted that while the US and China were trade rivals, they were also strange bedfellows in the effort to contain the North Korean nuclear crisis.
On President Trump’s decision to impose the tariffs, Assistant Professor of Social Sciences Chin-Hao Huang noted that the majority of US solar panel imports were actually from Malaysia and South Korea, not China, hence the President’s decision to target China as the cause of flooding the US market with cheap imports was quite unusual. He added that the linkage between the tariffs and the actual outcomes of bringing jobs back to the US was unclear since the marginal cost relief for the US coal industry due to these tariffs would be relatively insignificant, given that there was sustained interest from the US public to turn to renewable energy.
On the US trade deficit, Divisional Director and Visiting Professor of Social Sciences (Economics) John Driffill noted that there was no reason for all countries to have balanced trade all the time as goods moved from place to place. In fact, the US trade deficit was often regarded as a giant problem for other countries since the US could exchange US dollars, which was printed at no cost to the US, for real goods and services from them. The US also tended to be big spenders and not savers, hence leading to a trade deficit while the reverse was happening in China. Dr Huang added that the trade deficit was actually a signal of growing economic strength in the US market since the US consumers had more purchasing power to buy cheaper foreign goods and foreign investors had the confidence to invest in the US market. However, this would inevitably widen the trade deficit that US had with other countries.