Rikard Forslid on the trade conflict in Sveriges Radio
With triple-digit tariffs, the leading nations USA and China must redefine their economic and political relations. ”It’s not good for trade,” says Rikard Forslid, Professor of Economics at Stockholm University.
Photo: Sören Andersson
In an interview with Sveriges Radio’s program Godmorgon världen, Rikard Forslid says this about trade between the USA and China:
”It’s a very self-destructive behavior from both sides. So I think they’ll scale things back a bit from this situation.”
Who has the most to lose?
”They’re in slightly different positions. China has some overcapacity in its production system. They produce more than they can absorb. So they need to export, and the U.S. market accounts for about 15 percent of their exports. If this export were to disappear completely (which is unlikely), China’s GDP would drop by 3 percent.”
And for the U.S.?
”For the U.S., it’s the opposite – imports are important for them, and they buy a lot of components from China. Trump has likely underestimated that, which is why he eased the tariffs now. He hasn’t understood how global value chains work. So for the U.S., I actually think the long-term impact will be somewhat worse,” says Rikard Forslid.
