Chinese President Xi Jinping shakes hands with President Donald Trump before a bilateral meeting during the G20 Summit on June 29, 2019 in Osaka, Japan.
China News Service | Getty Images
The U.S.-China trade war is hurting America more than China, and is unlikely to be resolved quickly due to President Donald Trump’s strategy, an economist told CNBC.
Speaking to CNBC’s “Street Signs Europe” on Friday, Klaus Baader, global chief economist at Societe Generale, said the U.S. was currently suffering more from the trade war than China. He noted that while overall trade between the world’s two largest economies has shrunk, imports into China from the United States have fallen much more than exports.
Baader added that China “undoubtedly” got more out of trade discussions at last month’s G-20 summit than the United States, where U.S. President Donald Trump met with Chinese counterpart Xi Jinping. The two nations agreed at the summit to a truce on additional tariffs, with Trump agreeing to allow Huawei to purchase U.S. products and Xi saying China would buy “large amounts” of American farm produce.
However, Trump tweeted on Thursday that China was “letting (the U.S.) down” by not sticking to its word on buying American agricultural products.
Mexico is doing great at the Border, but China is letting us down in that they have not been buying the agricultural products from our great Farmers that they said they would. Hopefully they will start soon!
— Donald J. Trump (@realDonaldTrump) July 11, 2019
Baader told CNBC he was doubtful a more stable resolution to the trade war would be agreed upon quickly.
“The trouble with all of this is something I call the ‘Trumpian uncertainty,'” he said. “Tariffs have been threatened, they have been delayed, but in the end, they have been imposed. That only happened in June, let’s not forget this is very new, so the impact of all this is yet to come.”
He added that both sides seemed to prioritize saving face and disregard the fact that it was in both of their national interests to resolve the conflict, which made it difficult for markets and economists to prepare for what might come next.
Markets have been volatile amid the unfolding trade conflict, with global stocks swinging sharply on the back of new developments. Investor outlook on the length and impact of the trade war has been mixed, with equity markets rallying recently while bond yields have fallen. Baader described this pattern as a “great disconnect.”
Baader also expressed some skepticism over the way the U.S. was navigating the trade war.
“President Trump considers himself to be a master negotiator, and he believes this strategy of applying maximum pressure on China is actually going to work,” he said.
“I have some doubts that this is going to work – China has a perception of itself of historically having been a country that has faced aggressors and … (it has) a perception that its role in the world is principally benign, and that other nations are coming after them, and that makes the discussions very difficult.”
Francesco Filia, CEO and CIO of Fasanara Capital, agreed with Baader that China appeared to be the winner in the trade war. He told CNBC’s “Squawk Box Europe” last week that it was “not even clear what (China) had to give up” in order to get the agreement with the U.S. at the G-20 summit.
However, some experts disagree with Baader’s take on the U.S. currently being hit harder than China in the trade war.
Michael Hirson, a former U.S. treasury official and the current director for China analysis with Eurasia Group, told CNBC’s “Squawk Box” on Friday that China was feeling more pain from the trade war than the United States.
“There’s the direct hit to the economy and then there’s this really important medium-term risk which is supply chains moving from China,” he said. “That’s something that’s serious to China and something that Beijing has relatively little that they can do to mitigate that.”