Trade-war

Inside the US-China trade war

China’s trade relationship with the United States is at the peak of crumbling down. While US President, Donald Trump, is accusing China of imbalanced trade practices and theft of patent, China claims that the US has deliberately destroyed international orders with protectionism and unilateralism. This has led to a bitter trade fight between the 2 nations. The conflict intensified on Sept. 1 as both states imposed and increased tariff penalties on billions of dollars of each other’s goods. Locked in this battle, both sides threaten to alter tariffs and hike the present duties within the shortest time possible. 

President Trump’s tariff policy is aimed at encouraging the purchase of local goods. The policy makes imported goods to be expensive and hence have a poor purchase. In fact, the US has already slapped tariffs on more than $360bn of Chinese goods and is even promising to do more. Three tariffs were delivered by the US last year. This year, the US delivered another tariff having targeted imports from China. This was on goods like musical instruments and meat, with a 15 percent import duty. Washington, US’s capital city, is to impose a 5 percent increase (from 25 percent to 30 percent) of the existing tariff on some of China’s products by Oct. 1. If the US manages to impose all these effectively, then all China’s imported goods to the US are bound to be subjected to tariffs. 

On the other hand, China has strike back tariffs on $185 billion worth of US goods. It not only poses threats to the tariff rates but also on the qualitative measures on goods from the US. Nonetheless, it plans to hit another 3,000 US products with tariffs ranging from 5 percent-25 percent by the end of the year. Beijing, further announces that it would not purchase US agricultural products. This would adversely affect the US businesses that have their operations in China. All these threats seem to be taking root already as China has already hit the US Crude oil by a 5 percent levy. 

As now, Beijing pleads a lifting of Trump’s tariffs. To settle this, Trump and Chinese President, Xi Jinping have scheduled negotiation plans of rolling back the tariffs and enforcing a peaceful deal. The negotiations to bring the tariff war to an end, have however not borne any fruits as the two sides still remain far apart. The tit-for-tat game is now becoming alarming. It is a clear indicator of how dubious a trade deal can become. Business owners in these nations have been caught in the antagonism of the US-China trade war. The fight weighs down the global economy.

Most noteworthy is that China still remains to be America’s top trading partner. However, in the first quarter of 2019, trade flows to the US reduced by 9 percent. This is a clear indicator that the bitter tariff war, between these two great economies, has begun to bite.

It looks like China will suffer more than the US from this trade war. This is why Beijing has shown signs of willingness to work with Washington and calm down the trade war. While it might seem this way, the big question on the Trade War still remains to be, “Will America’s threatening tariffs make China to strike a deal without compromising any of its trade policies?”

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