TRADE WAR - Explained

Story By George Bates
Date: 21-August-2018

The term Trade War is used very often in this recent years. But do you know what it means? Trade war is basically a modern weapon to take leverage over other countries through economic warfare. United States is undoubtedly the champion of world economy and this the reason it uses the power of money to control the world economy.

But in the last few years China is trying to shake the throne. By doubling the GDP and using the new markets flourishing its export. Any of the nation whether it is China or US both are dependent on the Import-Export Deficit.

Today China is the manufacturing hub of the entire world. China has proved its high productivity and less manufacturing costing in almost every market. So all the major multinational companies have their manufacturing plants in China. Now the problem with the new tariffs are when the American companies will import the manufactured goods back to America they have to pay additional taxes which will lead to the higher price of the product. The trade war starts when China does the same with US products. China has imposed new tariffs on agricultural products. So it is very difficult for the US based agricultural market to keep up with the local vendors. As a result the agricultural market of United States will suffer.

The US-China trade deficit balance is almost 579 Billion$ which is the largest in the world. United States imports from China goods worth 463 Billion$ and exports on one third of it which is 116 billion$. By imposing new tariffs on the imports from China will rise the prices of electronic components, raw material and many small house hold items. This will ultimately effect the US consumer because the manufacturing unit cannot be shifted easily and labor prices are higher in US.

On the other hand the exports are being affected because of imposed tariffs on agricultural products like soya and corn. China has a lot more option from other nation and can also promote its own farmer and fulfill its requirement. Major companies like Mc Donald's , Star Bucks, Nike , Apple ,etc are already suffering the consequences of the trade war. The second main issue is of copyright issue. All the main brands have given their job work to the Chinese manufacturer so duplication of a copy righted product is common. Any new thing in the market is instantly copied by Chinese and they do it fast. So sometimes it is very difficult to find out which is real and which is duplicated.

All this issues are concerning but the thing is going right now it may be the new capitalist proxy war. The same type of war which we saw during the Cold War but this time it will be on economic battlefield. Now it is upto Trump whether to re-negotiate or to make an isolated business economy.


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