Sara Hsu on the US-China Trade War

A preliminary deal may be on the way, but neither side can truly declare victory.

Sara Hsu on the US-China Trade War
Credit: AP Photo/Richard Drew

On December 13, the United States and China both issued separate announcements outlining their “phase one” trade deal. It was the latest twist in the so-called “trade war,” which has been underway for over a year-and-a-half following U.S. President Donald Trump’s initial announcement of tariffs on Chinese exports to the United States. Since then, we have seen trade talks start and stop, and deals made and scrapped; the one constant has been the climbing tit-for-tat tariffs imposed by both sides.

With optimism riding high (or at least higher) with the phase one deal set to be signed in January, The Diplomat’s Shannon Tiezzi spoke with Sara Hsu for more perspective on the trade war. Hsu, Associate Professor of Economics at the State University of New York at New Paltz, discusses the trade war’s impact on both economies and the potential for lasting change in China’s economic practices.

How are tariffs impacting the economies of the U.S. and China? In other words, who’s winning the trade war?

No one; both sides are losing from the trade war. Billions of dollars have been lost by consumers and producers. There is a redistribution factor, with tariff proceeds going to the governments, but also reduced spending and realignment of supply chains away from China (for the U.S.) and away from the U.S. (for China).