Trump clearing the way for China trade war

The US flag flies over Chinese shipping containers that were unloaded at the Port of Long Beach, in Los Angeles County, on Sept 29, 2018.
The US flag flies over Chinese shipping containers that were unloaded at the Port of Long Beach, in Los Angeles County, on Sept 29, 2018.PHOTO: AFP

The importance of the newly concluded US-Mexico-Canada Agreement, or USMCA, may have less to do with the details than the signal it sends: President Donald Trump is methodically settling his multifront trade war to fight China.

The United States and Canada reached a deal late on Sunday to salvage the three-country, US$1.2 trillion (S$1.65 trillion) open trade zone agreement with Mexico that was on the verge of collapse after more than two decades.

Economists from JPMorgan Chase & Co believe that the USMCA shows Mr Trump is holding back from launching a "war on trade" that could upend the world economy.

However, he is embarking on a trade war with China that will take a bite out of both countries' economies next year and raise the risk of a broad pullback in global business confidence.

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A version of this article appeared in the print edition of The Straits Times on October 03, 2018, with the headline 'Trump clearing the way for China trade war'. Print Edition | Subscribe