US-China trade war might last for 2-4 years, predicts Douglas Paal

The trade war between the United States and China might last for 2-4 years as the world's two largest economies have not found an efficient way to deal with their economic and trade problems, according to an expert.

Douglas Paal, vice president for studies at the Carnegie Endowment for International Peace, made the prediction based on a trade war between the United States and Japan which took place in the 1980s.

The relationship between the United States and China is following a trend of deterioration, which would increase the duration of the trade war, said Paal.

The United States and China would fight like kilkenny cats as the trade war could do damage to the two countries in difference degrees, said Paal.

As for the United States, the trade war would give rise to an increase in production costs for American companies, thus weakening their international competitiveness. As for China, its problem of overcapacity would deteriorate and job opportunities would shrink because of the trade war, according to Paal.

Paal predicted that the two countries might resume the communication channels that are needed to solve their trade problems later this year.

Hours after the Trump administration activated 25 percent tariffs on $34 billion worth of Chinese imports in a new wave of tariff increase against Beijing, the Office of the US Trade Representative on July 7 released a statement on its website allowing companies seeking product exclusions from tariffs on Chinese goods imported to the United States to file such requests within 90 days.

Paal does not consider the move as a sign of the US softening its stance on China, saying that the policy is aimed at reducing the losses of US firms and nationals if the trade war becomes a full-blown one.

When asked about the impact of the US-China trade war on other economies, Paal said that it could change the global allocation of production, which might benefit countries like India and Indonesia if they could adopt right policies to grasp the "opportunity".

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