Snapping the Trade War: Stephen Moore Weighs in on US-China Agreement
US economist posits that the tariff truce between the US and China might signal the beginning of a financial transformation.
Stocks skyrocketed on Monday following the announcement of a 90-day truce on U.S.-China tariffs, and former Trump economic advisor Stephen Moore believes it's the start of a new economic revolution.
"I'm not a big tariff guy. I'm more in favor of free trade and lower tariffs," Moore shared on 'Varney & Co.' However, he acknowledges the potential benefits if President Trump can maneuver favorable trade deals for the U.S.
"If Trump can pull this off, I see justification for the method," Moore stated, pointing to soaring stocks as evidence.
Since the beginning of his second term, Trump has imposed steep tariffs on trade partners, forcing them to the negotiating table.
Trump's Trade Truce: The Nitty-Gritty
After an intense trade war, the U.S. and China reached a truce, signaling a 90-day pause on the clash. China, targeted by Trump's heaviest tariffs, agreed to the truce.
U.S. tariffs on Chinese imports, hiked to 145% last month as Trump raised tariffs worldwide, will decrease to 30%, while China will lower its tariffs from a retaliatory 125% to 10%.
Trade Wins Abound Post-US-UK Deal: Moore Predicts More to Come
The deal came after a historic agreement with the UK last week, a fact Moore emphasized before shifting focus to China.
"We seem to be looking at a dramatic reduction in tariffs on both sides of the Pacific," Moore said optimistically, with a caveat about the tricky details that lie ahead.
"If this domino effect continues, we'll see a lot more green on that screen over the coming weeks," Moore concluded, alluding to the stock market's bullish trajectory.
Although there are still "rough waters" ahead, Moore's optimistic prediction carries a significant weight as the Dow reaches record highs.
Sources:
- White House.gov
- USCC.gov
- Investopedia
Enrichment Insights:
- The trade truce between the US and China consists of several key actions to ease tensions, encourages bilateral economic cooperation, and reduces tariffs for both countries.
- The nations will suspend portions of their imposed tariffs, with the US maintaining a minimum 10% tariff. China will lower its tariffs from 125% to 10%, with the US reducing its tariffs by a substantial amount.
- Both countries pledge to address non-tariff countermeasures and will hold further discussions to enhance market access for American exports.
- Representatives from both countries will meet alternately in China, America, or a neutral location to continue discussions.
- These actions are scheduled to be implemented by May 14, 2021.
- The US-China agreement has resulted in a significant decrease in tariffs, as evidenced by the soaring stocks following the 90-day truce.
- This strategic move by President Trump, which includes lowering tariffs on Chinese imports, could potentially lead to favorable trade deals for the US and further boost the finance sector, especially investing and business.
- If the current trend of reducing tariffs, seen in the US-China and US-UK deals, continues, we might witness increased economic cooperation across the globe, positively influencing various sectors such as markets, technology, and the economy.
