Essay on US and China Trade War

US China trade war is going on for quite some time now. The trade war escalated due to the Statement of US President Donald Trump accusing China of unfair trading practices and intellectual property theft. China on the other hand thinks US is afraid of China becoming global economic power and that’s why is using such schemes. US and China are going back and forth imposing huge tariffs on each other’s products. Negotiations between the two countries are ongoing but are not proven effective and issue is still remaining. Amidst all that businesses are hurting the most especially technology sector. President Trump’s strategy is to impose huge tariffs on imported products and encourage local products. According to the new study both US and China can’t win trade war. They have to eventually come to an agreement to make things right between them. Both US and China rely heavily on each other products. If trade war continues it will greatly affect the economy of both countries.

The trade war is affecting not just US and China it is affecting businesses all around the world. Chinese company Huawei which makes mobiles and computers have its loyal customers all around the world. Its smartphones rely on android OS which is made by google which is US company. Due to trade war US banned the use of android on Chinese smartphones which is affecting smartphone users all around the world. The trade war has also affected supply chains all around the world which is raises concern of global recession. Trump’s statements such as “We don’t need China and, frankly, would be far better off without them” aren’t helping either. The thing is both US and China can’t replace customers of the products with a different continent. For example, smartphones imports from china to US in 2018 accounted for 13% of total imports.

This means that US relies heavily on China for meeting the smartphone demand in its country. Also, China relies heavily on US based companies such as Microsoft and Google for software. The US and China are now looking into restart trade negotiations. They both know they can’t continue this any longer. It is very difficult for both countries to replace their customers with any other country. Tariffs are ultimately paid by customers which harms business activities. The trade war is heavily criticised by international community as well. Both China and US are world’s largest importer and exporter respectively. They are essentially the pillars of economy of the whole world. Because of the trade war US farmers and manufacturers are facing crises and prices of agricultural products are also rising. Trade war has greatly affected the farmers of US. Though some countries have benefited from the trade war it has largely caused economic instability all around the world. It has greatly affected the stock market as well. Some economists are in favour of trade deficit and some thinks that it can escalate problems further.

The increased tariffs are like import tax for the people of US that they must bear. For China it is relatively easy to switch its exports to other countries and increasing its total exports. On the other hand, it is difficult for US to divert its export to other countries because of the supply chains that are difficult to relocate. If we look at the situation collectively both China and US are losing from trade war. It also affects the production process in China and US due to complex supply chain network between them. The trade war will affect prices of the goods all around the world. US heavily relies on China for the manufacturing of its electronic products. Due to low cost labour in china US was benefitting in cost department but due to the trade war there is also disruptions in supply chain network. The effects of the trade war can get even worse if US and China doesn’t settle things between them.

It is not only affecting US and China it is affecting the global economy that’s why both countries will have to come to table and resolve their issues. Starting a trade war is a bad idea in a first place. It ends being a losing situation for both countries. Its losses outweigh its gains. Global market disrupts and countries have to deal with supply chain issues. The negative impacts on trade, exchange rate and production are not worth it. Changing trade patterns also comes with its costs. In short the US and China both can’t afford trade war because the losses outweigh benefits in the long run (Walcott, 2019).

References of US and China Trade War

Walcott, J. (2019, June 24). TIME Magazine. Retrieved from TIME Magazine UK: https://time.com/5611588/china-trade-war-talks