The US-China tech spat is a less costly fight than the trade war. The two nations will review their deal that reduced tariffs as the White House refocuses on purging Chinese technology. The latter is nothing to celebrate, but at least the economic implications are more limited than sweeping import levies.THE US-China tech spat is a less costly fight than the trade war. The two nations will review their deal that reduced tariffs as the White House refocuses on purging Chinese technology.
Officials have hinted that the deal will stay in place. On Saturday, US and Chinese negotiators will assess the so-called Phase One pact reached in January, when Beijing agreed to boost US imports by US$200 billion over two years. China has fallen short of its commitment by more than half through the end of June, but White House economic adviser Larry Kudlow earlier signalled that the pact will survive.
Investors have taken comfort, with markets in both countries rallying. During the tit-for-tat levies, business investment in the US contracted for three straight quarters last year, while factory production dropped by 1.3 per cent in 2019 - the worst year for American manufacturing since 2015. Companies from Walmart to Ford Motor were affected and passed higher costs on to customers.
It's difficult to quantify the impact the duties had on Chinese firms, but they were already hurting amid a wider economic cool-down. The export manufacturing sector makes up around a fifth of GDP and employs a lot of poor people.