Yahoo Finance’s Brian Sozzi and Alexis Christoforous discuss the U.S.-China trade war with Chad Bown, Reginald Jones Senior Fellow and Peterson Institute for International Economics Fellow.
BRIAN SOZZI: The US election next week could be a turning point for American foreign policy. Let's check in with what's happening on the China trade front and what to expect under both candidates with Chad Bown from the Peterson Institute for International Economics. Chad, good to see you this morning. Has the president lived up to his promises to go tough with trade on China?
CHAD BOWN: Well, he certainly has in the sense that he's imposed a lot, a lot of tariffs on imports coming in from China, starting this trade war with China back in 2018. You know, they called a truce to the trade war. They signed a trade agreement back in January. And basically since then, despite the pandemic, we know there's been a cooling off of tensions. And we've been kind of waiting to see what the next steps in that relationship are ultimately going to be.
BRIAN SOZZI: What went wrong? We heard so much bluster from the president, obviously in 2016 and through the past few years. It just hasn't seemed to live up to expectations.
CHAD BOWN: Well, I think, you know, so in terms of what went wrong with the trade deal, so as part of this trade agreement that President Trump signed with China back in January, China promised or pledged that it would buy $200 billion of additional American exports over the course of this year and next. I think there's a number of reasons why China thus far hasn't been able to live up to that pledge.
First of all, the numbers were astronomical when we looked at them, even back in the beginning, before the pandemic. It just seemed like it was going to be really, really tough to reach. Obviously, then you have the pandemic. But that being said, the exports haven't materialized.
And It's not simply because of the pandemic. We put out a report this week to show that, you know, it's for other reasons, that the aircraft sector has not done well. You can trace that back to, you know, the grounding of the 737 Max, the Boeing, after the Boeing crashes.
The automobile sector has not done well. But some of that dates back to the tariffs in the trade war that caused some production to shift from the United States all the way to China, to service the Chinese market. So I think there's a lot of reasons for why the relationship has not done particularly well in 2020. And they all can't simply be tied to the pandemic, unfortunately.
ALEXIS CHRISTOFOROUS: Chad, what do you think we can expect on the China trade front during a Biden presidency? There's this feeling out there, and I don't know if it's justified, that Biden might be soft on China, or, at least, would his approach with China be different than that of Trump?
CHAD BOWN: So I don't think soft is the right way to frame it. I think, in fact, you know, one of the concerns with how the Trump administration has approached China is that they haven't-- gone after China entirely alone. It's only the United States, for example, that has imposed tariffs and sort of made these demands of China.
And, you know, the concerns that we face are shared by lots of countries around the world, Europeans, the Japanese, that would be willing to kind of work with us, take our side in a common approach to China that the Trump administration just hasn't adopted. So what the Biden folks have said is that they would be more willing to kind of work that way, to engage with allies on China.
So I don't think necessarily it's a softer approach, but it would definitely be a different approach, maybe a more coherent and cohesive and strategic approach than what we've seen thus far.
BRIAN SOZZI: All right, let's leave it there. Chad Bown from the Peterson Institute for International Economics. Good to see you.
CHAD BOWN: Thanks for having me.