LOS ANGELES, Oct. 8, 2019 /PRNewswire/ -- In its third quarter report for 2019, the Cathay Bank/UCLA Anderson Forecast U.S.-China Economic Report casts significant doubt on the possibility that the ongoing trade war between the United States and China will end any time soon. To the contrary, the report, co-authored by economist William Yu and UCLA Anderson Forecast director Jerry Nickelsburg, asserts that significant differences motivate the negotiating position of the two sides.
The U.S. continues to refuse a 50-50 compromise, a refusal rooted in the belief that China has benefited unequally from decades of trade between the two nations. China, though, has repeatedly indicated that it will not accept an "unequal treaty." If the upcoming October negotiations fail ― and this report expects them to fail ― additional U.S. tariffs on imported Chinese goods will be triggered. The result is that nearly all goods imported into the U.S. from China will have tariffs of either 15% or 30%.
With the trade war a given, the report speculates on the economic implications of a potentially less-than-sunny global economy.
"Economic analysis of past trade disputes and tariff barriers suggests that the U.S. will be purchasing more, higher-priced goods from other countries and that U.S. supply chains will diversify, if not completely change. China will continue, indeed intensify, its pivot toward South and Southeast Asia for trade in goods and toward European companies for foreign investment. The longer the trade war goes on, the more costly it will be to recover the previous, more efficient trading patterns," the report states.
The report acknowledges that both sides appear entrenched in intractable positions. With the U.S. "going it alone," the absence of a third nation with the diplomatic clout to aid in negotiations, and China's framing the trade war as an example of U.S. imperialism (not to mention an opportunity for China to assume the role of global economic leader), Yu and Nickelsburg assert that there is no obvious path to a solution. Given such conditions, the authors expect higher prices and an evolution in existing trade patterns.
About UCLA Anderson Forecast
UCLA Anderson Forecast is one of the most widely watched and often-cited economic outlooks for California and the nation, and was unique in predicting both the seriousness of the early-1990s downturn in California and the strength of the state's rebound since 1993. More recently, the Forecast was credited as the first major U.S. economic forecasting group to declare the recession of 2001. Visit UCLA Anderson Forecast at uclaforecast.com.
About Cathay Bank
Cathay Bank, a subsidiary of Cathay General Bancorp (Nasdaq: CATY), offers a wide range of financial services through nine states in the U.S. as well as a branch in Hong Kong and representative offices in Beijing, Shanghai and Taipei. Founded in 1962 to support Los Angeles' growing Chinese American community, in the past half-century the bank has expanded and grown with its customers, providing them with the tools and services they need to achieve their goals. Learn more at cathaybank.com. FDIC insurance coverage is limited to deposit accounts at Cathay Bank's U.S. domestic branch locations.
About UCLA Anderson School of Management
UCLA Anderson School of Management is among the leading business schools in the world, with faculty members globally renowned for their teaching excellence and research in advancing management thinking. Located in Los Angeles, gateway to the growing economies of Latin America and Asia and a city that personifies innovation in a diverse range of endeavors, UCLA Anderson's MBA, Fully Employed MBA, Executive MBA, UCLA-NUS Executive MBA for Asia Pacific, Master of Financial Engineering, Master of Science in Business Analytics, doctoral and executive education programs embody the school's Think in the Next ethos. Annually, some 1,800 students are trained to be global leaders seeking the business models and community solutions of tomorrow.
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UCLA Anderson School of Management
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SOURCE UCLA Anderson Forecast