US | Highest hurdle to a more open trade policy is still China

The Joe Biden administration faces unresolved trade disputes across the world, but the US-China relationship is the area with the greatest barriers to tariff cuts. We estimate that failing to cut tariffs back to pre-trade war levels will cost the economy a GDP growth boost of around 0.5ppts over two years.

What you will learn from this report:

  • We expect tariff cuts on around $110 billion of consumer goods imports from China by late 2021, but other trade war levies will likely remain in place for the foreseeable future.
  • US-EU tariffs are likely to come down within Biden’s first year in office as bilateral talks on aircraft subsidies and multilateral talks on corporate taxes relieve current sources of tension.
  • The least risk of trade friction is in North America. With no major tariffs currently facing either Canada or Mexico, and the USMCA enjoying bipartisan support in the US, potential points of disagreement in the near term are unlikely to threaten the US’ largest trading relationships.

Topics: United States, Trade, Trade war, GDP, Greater China, US economy, US-China relation, North America