- What role (if any) does President Biden’s decision in July to end his presidential re-election campaign have on the economic conflict between the US and China?
Changing candidates probably doesn’t change the Democratic Party’s approach on trade policy, but it would be worthwhile to hear about this issue from the candidates in the lead-up to the election. I don’t think the outlook on trade policy changes much with Kamala Harris as the presumptive Democratic nominee, although it would be good for the candidates to discuss these issues. Our economic model recovers estimates of switching between trade war and trade peace from the actions of the firms most affected by these tariffs. These firms probably thought there was a chance that Harris could be president when making their decisions. It would be good for Harris and Trump to debate this issue.
- How long do you think the current trade war between the U.S. and China will last?
Based on the way firms have been changing suppliers, our model predicts there is a less than 20 percent chance the trade war is over by 2025. Our model estimates that the US-China trade war has a 17 percent chance of ending in 2025, so it will most likely last at least four or five more years. Of course, there’s always a chance that something will break this logjam. It was a big surprise in 1971 when Nixon lifted a 21-year trade embargo on China. Nixon was attempting to get us out of the Vietnam War, and he was hoping the Chinese, who were supporting the Vietnamese, could put some backroom pressure on Vietnam. But it’s not clear what factors exist today that could pull us out of the current trade war.
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