In December, A.T. Kearney’s Global Business Policy Council has released its year-ahead predictions for 2019. One key prediction the company made is that the U.S.-China trade war will continue to intensify, and will include even more tariffs and retaliatory actions. Aftermarket Business World spoke to Courtney Rickert-McCaffrey, manager of thought leadership in A.T. Kearney’s Global Business Policy Council, about the situation with China.
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Q. Your expectation is that the trade war with China is going to get worse before it gets better?
A. It is important to note that we published our report in early December, right after Chinese President Xi Jinping and U.S. President Donald Trump met in Buenos Aires and called for a truce for three months. That didn’t sway our interpretation.
There has been a lot of back and forth, and they just had their first major meeting to discuss progress. We don’t think they will be willing to meet the March deadline in terms of scaling back on the trade war.
Q. In our industry, there is a lot of agreement that the Chinese do need to be taken to task over issues like steel dumping and intellectual property, but that the tariffs aren’t likely to help.
A. Not in the short term, especially with IP protection. They can’t change those problems over night, even if Beijing wanted to. It would take awhile for any changes to actually go into effect. There is a big question around whether they are even willing to make that kind of concession.
What is interesting is that a lot of people in industry and in governments around the world agree that this is an issue and that China’s behavior should change given that they are part of the World Trade Organization and other institutions, but they question this tactic as far as actually getting them to change.
In the U.S. we have to try to engage with traditional allies in Europe to try to put pressure on China on that front as well. Then there could be movement on this in terms of greater IP protections in the future.