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The Impact of Trade War between US and China
A trade war happens when one state took revenge on other by raising the tariffs of import or setting other limits on the opposite of imports of the country. Trade war which is the side effect of Protectionism which are the actions and policies of government that balk international trade. And trade wars are debatable. trade wars claim they ultimately hurt consumers, local companies, and the economy. Trade wars’ critics are not modern society inventions.
While running for President in 2016, President Donald Trump described his look down one for much current trade bond, troth to bring construction jobs back to the United State from other countries where they have been outsourced such as China and India. In early 2018, President Trump acted his efforts particularly against China, threatening a big fine over claimed braintruster property theft and major taxes on $500 billion worth of Chinese items for consumption such as steel and soy. The Chinese hit backed with a 25% tax on over 200 US productions.
Throughout the year, the two nations continued to threaten each other, releasing lists of proposed taxes on various goods. In December, each country had the same opinion to stop imposing any new taxes, the tariffs war ceasefire continued into 2019. So the US-China trade war has entered a dangerous new risk of more to nearer. A quick fix is still possible, next month President Donald Trump and Xi Jinping will set to meet at the G-20 summit. But at this point, it looks more likely that war will be long, messy and expensive.
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So there are many impacts of trade war between US and China. These are two main facts that the trade war between the world’s two strongest economies is taking hold as comments from President Trump and his advisers turn increasingly aggressive and actions from both the White House and Chinese President Xi Jinping only deepen the impasse.
Economic consequences
In term of employment, the impact can be more profound. There are two different methods decided to judge how the rate of employment will be concerned. The first estimation is an opinion of the last calculations of value-added loses. China’s taxes data show that export of China to the U.S are mainly labour-intensive and concentrate on electronic devices, furniture, toys, miscellaneous product, and textiles. As for the production of capital or technology-intensive commodities, the main role of China in the global value chain is to provide labour, as in such case the estimated impact of the trade war on employment will be strongest.
On May, Trump took another case the order of executive that make to ban US companies from buying technology from controversial Chinese telecom huge ZTE and Huawei. But not all taxes will be same or alike straightforward to excuse. These are the ones, things like imports of mobile phone and furniture as well as exports of soybean and oil, most possible consequence in consumers of higher prices, lower profits for business as supply chains adjust, or both.
As negotiations continue to sour, threatening to include essentially all trade between the world’s two largest economies, Ken Roberts said “ he took a look at the imports and exports where the United States and China are most dependent on each other, whether the U.S imports are currently subject to tariffs or they are merely threatened.” Through the first quarter, the most recent U.S data available, China accounted for 6.37% of all U.S export, down from almost 8% just one year earlier. China accounted for 17.71% of all U.S imports, down from 20.55% in the first quarter of 2018. Again both percentage are the lowest in years Overall U.S cell phone imports are down 5% so far this year_ down 29.2% from China while up from Vietnam, South Korea and Taiwan. With cell phone and related equipment, the impact of the trade war, at least on the surface, is both reduced U.S imports and adjusted supply chains.
In the furniture category, more than 41% of all imports come from China. Again, a strong Dependency Quotient. That’s bottomward from just less than 50% in the initial sector going back years. Indeed, imports of furniture into the U.S are down 6.7% this year. Those from China fell almost $633 million. As with the cell phone category, one of the beneficiaries has been Vietnam, with furniture imports into the United States increasing almost $115 million. So, once again, reduced imports of U.S from China while increases from other nations, meaning a shift in supply chains that can be costly.
The story is essentially the same for computers, TVs and monitors and numerous other imports from China. Decline in Imports, shift to other market.
It is admitted that trade war increase the prices of Chinese imports. These consumers are highly dependent on Chinese imported goods suffer by paying higher prices. Recently, US producers and firms who depend on Chinese import of raw materials have been suffering by increasing costs of production which will be translated into higher prices causing cost-push inflation in US markets. Eventually the profits of US firms decrease due to increasing costs and the profits of Chinese firms decrease because of reduced product. Moreover, the stock and bond returns of the firms who are highly dependent on Chinese imports will decrease compared to other firms which are less dependent on them. On the side of export, the result is a few reduce declared since exports of U.S to China allowed for less than 7% of the total of US. But two stand out; soybeans and oil. In Oil, China had been the no.2 buyer of US oil until retaliatory taxes went into effect. The impact of the U.S-China trade war signs are hurts.
