The U.S.-China trade war will affect
others too
The United
States and China implemented a tariff of 25% on imports worth $34 billion. This
is the biggest trade war in economic history. It has the potential to cause some significant damage to the world
economy. U.S. President Donald Trump
has vowed to possibly tax all Chinese
imports into the U.S. China has responded by targeting American exports - a
move that could cause job losses in American states that accommodate Mr.
Trump’s voter base. Other major U.S.
trading partners such as the European Union, Mexico, and Canada have also
slapped retaliatory tariffs on various U.S. goods.
In a globalised world, no country
can hope to impose tariffs without affecting its own economic interests. So
both the U.S. and China are doing no good to their own economic
fortunes by engaging in this tit-for-tat tariff battle. The ongoing trade war also threatens the
rules-based global trade order. 11 Asia-Pacific countries went ahead to sign a
trans-Pacific trade deal while leaving out the U.S., which had pulled out of
the Trans-Pacific Partnership in early 2017. If global trade tensions continues, countries might resort to other
destructive measures such as devaluing their currencies to support domestic
exporters.
The current retaliatory trade war
between two large economies does not augur well while the sluggish growth
affects the world as a whole. In a largely interdependent world let
negotiations and dialogue resolve the various trade issues instead of the damaging
and demeaning trade war for good of the nations.
Is US creating a
fresh US national Zionism to reboost industrial - military complex? All these
different actions could combine into a holocaust, coupled with tremendous
pressures of refugee problems, of a new economic disaster, unseen in human
history.
USA has taken a calculated risk by
taking a decision of imposing import duties. It will be worth watching how
further developments take place in this trade war mainly with China. It may be
true that no one wins in trade wars.
Trade wars become inevitable when a
country like Communist China poses a threat to local manufacturers and cannot
be deterred by negotiations. Is it not true that during last two decades or so
China has used free trade policies very cleverly to increase exports and
rapidly expand its manufacturing capabilities? At the same time, China has used
its opaque systems to devise a strategy which has enabled it to restrict
imports. Is it true that on account of Communist China’s invisible subsidies to
its manufacturing sector, democratic countries like USA, India and many EU
countries are at a disadvantage when they trade with China? All democratic countries must join hands so
that they can defeat China in its game of subsidised exports.
The nasty tariff war has started
between major powers which is not conducive to the global economy and
specifically for developing countries. Sudden imposition of tariffs will affect
the concerned countries and will mute industries and lead to heavy job loss on
market contraction. Already there is global economic contraction and now it
will get deepened with further chronic effects. If China loses market like this
its endeavour to take number one rank as global monitor will be in vain.
The Bank of England has estimated
that if this trade war continues to build up, it will cost the global economy
about 2.5% of GDP over three years, Britain 2% and the United States as much as
5%. Either President Trump is not receiving good economic advice, or he is
choosing to ignore it. As pain builds up in America, it will transmit through
the political system. China has seen losses in its stock market and currency.
It needs to deal with serious problems at home, including deleveraging.
However, will it have to turn the other cheek to America?
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