U.S. x China – Trade War
U.S. and China seem to have entered into the preliminary stages of what could be a fierce trade war. With both the countries being at loggerheads regarding the trading and tax tariffs, it remains to be seen as to who will have an upper hand in the whole scenario.
On July 6th, 2018, the White House had announced a 25% tariff on imports from China totalling $34 billion and these mainly included manufacturing components. Beijing gave an immediate reply by matching with tariffs on U.S. soybeans.
Back on July 10th, 2018, Trump’s administration released a list of tariffs on goods worth $200 billion and the categories ranged from food ingredients to even auto parts and construction materials as well. This list was going to be marked at 10%. This list has smartly targeted the Fortune 500 companies which outsource the different materials to China.
China was not going to be a mute witness to it and they started entering into talks with European markets and politicians to improve their market access and even investment options.
Trump has argued that China has an unfair trade policy in place and he also went on record saying that they steal the technologies used by American business. Of course, the staggering growth of China’s trade proves the kind of power they aim to become. Compared to the start of the 21st century, the country is exporting seven times the amount. It has also turned out to be the biggest exporter of goods in the world and the amount has been ticked at $2 trillion.
What one cannot neglect is that it also acts as a great market for other nations too. Despite being the biggest goods exporter, it is also the second largest importer of goods and services too. If we take into account, the current account of the balance of payments comparing the exports done to the imports made, China manages a surplus of $165 billion a year which is definitely huge but Germany and Japan are known to have larger surpluses.
Trump believes that these figures are unfair because of the trade practices that are ongoing and desires to change that. However, if you take into account the trade on services like finance and travel, U.S. ends up being the world’s biggest exporter.
It remains to be seen as to what would come of the U.S. China trade war and who would ultimately have the upper hand. However, looking at the aggressive marketing and strategies by China, the war is likely to go on.
By Andre Lazzuri