RISS expert compared the current trade war between the United States and China with the economic policy of the United States towards Japan in the mid 80-ies. “In 1985, the Washington Plaza Hotel hosted a meeting of Finance Ministers and central bankers from several countries, including Japan. At the event, it was decided to implement measures to reduce the dollar and increase the exchange rate of other countries, especially the Japanese yen. After all, the Americans forced Japan to raise the rate of its currency against the dollar. Eventually, this led to the fact that Japan slid into a recession. There has been a period of stagnation since the beginning of the 90-ies,” he said.
China proportionally increases duties on the US goods in response to each increase in duties on imports of Chinese goods from the United States. “China has introduced the increased duties on American goods in the amount of $60 billion. Beijing has strong ‘king cards’ in trade spat with the US. First of all, it is American treasuries (treasury bonds), the largest holder of which is China. If it starts selling them, there will be negative consequences for the US economy. In addition, there are branches of large American corporations in China, which can be pressured by administrative measures. The duties that China introduces can affect primarily the goods that are produced in states that voted for Trump and Republicans. First of all, they are agricultural products,” he explained.
“President Trump is facing growing pressure in proportion to the introduction of new duties on Chinese goods. Many importers ask the President to stop the escalation of trade wars. This pressure suggests that the US is suffering considerable damage from the Chinese reciprocal measures. The current situation resembles the rivalry between the USSR and the USA in 50-80 years. This fierce confrontation has been going on for decades. We should expect the same rivalry from China and the United States,” RISS expert concluded.