Vladimir Sedalishchev on the US-China trade war as Trump's political game

Vladimir Sedalishchev said that the decision to raise tariffs was expected, but emphasized the unpredictability of the US President’s actions. «Trump is a very experienced businessman, politician, and showman. He clearly understands that it is not in his interests to be completely predictable, nor is it in his interests, and not in the interests to achieve his goals," the expert said. He also drew attention to the fact that the reasons for the trade war voiced by Trump seem strange to economists, such as the explanation of increased tariffs by the fight against drug trafficking.

Commenting on China’s retaliatory measures, Vladimir Sedalishchev noted the asymmetry in the potential of the two countries. «The U.S. exports goods to China three times less than the same indicator of China’s exports to the United States. That is, the volume of trade that Washington will suffer in Beijing’s action is three times less," he explained.

Analyzing the possible consequences of a complete cessation of trade between the United States and China, the expert stressed that both countries would suffer, but it would be more difficult for China. «I would not worry about America, because they have a quarter of the world economy in terms of nominal GDP, in terms of real GDP — 18%. It’s a fairly large self-sufficient economy. They are capable of replacing the imports that have fallen out if they want to. Yes, they will live not as well, but no one there will starve to death. And China, most likely, will suffer more," said Vladimir Sedalishchev.

The expert also commented on Trump’s decision to pause raising tariffs for other countries, comparing the situation to the «bad cop and good cop» method: «Here, the Trump Administration is the cop, and China is the investigator. It’s important for Trump to demonstrate that his threats are real. There may be a bit of a conspiracy here as well. He said today that his friends made a lot of money in the stock market. Conditionally, before the 90-day moratorium was announced, he wrote a post on social media saying now is the time to buy. In a sense, this is an example of carrot and stick, training his internal and external audience," the expert explained.

At the same time, he expressed the opinion that Trump’s actions are more related to international politics than to economics. «It seems to me that the main reason is that he is frightened by the fact that China has begun to overtake the United States, at least in terms of real GDP," Vladimir Sedalishchev concluded, adding that the formula used by Trump to calculate tariffs seems ‘extremely unserious’ to economists.