TRADE WAR
The trade war between the U.S.A. and China as well has caused a significant impact on the economy of the two countries, which have contracted to other countries hence affecting the global economy. The trade war has led to the reduction of private investments, which have affected the investors who run their funded businesses; it leads to a reduction of real consumption besides leading to a reduction of household income. On the contrary, the trade war causes the tariffs to reduce economic activities all across the globe by three main ways; capital goods, as well as consumer goods, increase in their cost thus becoming too much expensive, reduction of investment or even investment being slow due to increasing in business uncertainty, decrease in retaliatory tariffs by other countries which in turn makes the exports way too expensive
The trade war has slowed down China’s economy to the extent of making the situation irreversible. The scenario affects and limits globalization as far as the tariffs are concerned.
The trade war may lead China to mitigate its reliance on the importation of gas from producer countries. Thus has affected their sustainable business because they have to switch from industrial production of coal to gas production and, in turn, employ energy management technologies for their renewable resources. Following this matter, China will have its own goals and plans to manage its business and production activities. Relations between China and the U.S. will be put aside and will not only affect the U.S. as a nation but also other countries that rely on the U.S. for their global production activities.
Since the trade war started to affect sustainable business, Chinese goods that are worth billions of money are now taxed about 25% from low taxation of 10%—therefore forcing China to threaten taking measures that will precipitate the trade war. From a reasonable point of view, unreasonable taxes will be paid by China to their government by the coming years. On the other hand, people importing and manufacturers in the U.S. are cutting costs of their commodities and putting another date on their business deals in addition to shutting investments. Some industries have been affected more than others, for instance, Food and Agribusiness, since China has stopped importing farm products from the United States. As a result, farmers in America walloped since there are no markets for their farm products, which means that their massive productivity has been dramatically affected. In the Tech Sector, because more companies belong to the U.S. Besides China and tech manufacturers of China rely on suppliers of American semiconductors for the running of their business, escalation in the US-China trade war can hit tech traders in U.S and China.
Due to pressure that is put for Trump by the people of his nation not to raise the tariffs as they are losing their businesses as well as jobs, Trump will have to cross some lines that will create a war that affects all sustainable businesses. (Ibrahim et al. .2019,40).
The trade war has caused a great disturbance on the stock market throughout the globe as it has caused companies to lose too many points, which in return hurts the investors pushing them to find new ways of carrying out their businesses. The trade war has affected the trade economy since it has made several countries to have their manufacturing performance being low.
Trade war has led to the loss of jobs in most countries around the World and, to some instances leading to the creation of no responsibilities. It also affects the wild trade since no business activities are taking place for production and provision of goods to be sold through the world market. In addition to this, manufacturing is affected; thus, events such as retail as well as distribution are interrupted. Uncertainty created by the trade war makes the capital investments to be reduced and also delay hiring.
The trade war has hit the tariffs bas a significant spot on which has affected the integration of the global economy. Thus has contributed to technology competition and technology conflicts. The conflicts created may lead to decoupling on the economy as well as creating a geopolitical confrontation. Prediction of an administration in the U.S. looming scenario may lead to financing campaigns and spending of a lot of money, which makes the relations between the U.S. and China exposed to risk alongside causing a disorder in the international order.
Due to the trade war, the economy of the U.S. has consequently gone low, which has impacted their globalization (Awan, 2016, 15). Thus has forced China as well as other partners across the globe to limit their participation with the U.S. As the negative impact continues to take more in China, it will lead to China’s economy having frictions that are spread to the U.S. as well as across the globe. As the spread continues, it would worsen the developing economy and also the emerging economy.
The trade war, other than lowering the economy, causes a crisis of global finance, which makes the global finance record a fall (Loridas, 2011, 403). Due to trade uncertainty, organizations such as the World Trade Organization have put a warning on trade growth as retarded and high chances of down risks being present.
Trafficking has caused countries which are partners to make high charges on their goods such as exports, thus forcing some states to step aside from the negative impact. For instance, China’s tariffs have increased on the U.S. exports, while on the other side, the U.S. tariffs on China’s exports are low. China has gone to the extent of targeting some part of the U.S. economy by making an increase in regulatory scrutiny firms that belong to the United States. Besides, interrupting the global supply chains and cause an increase in prices to consumers who depend on U.S.as well as the U.S. firms that rely on Chinese imports. Thereby leads to job losses.
Many businesses that import goods from these countries will have to pay a hefty tax to their governments in the name of the trade war, with billions of dollars’ worth of goods tracked at twenty-five percent compared to the average percent. Many researchers have predicted that companies affected, but this war, especially those that import goods from China and the U.S., will pay an unreasonable tax that, in the end, may cripple their entire operations. This trade war has resulted in harsh and far-reaching consequences that have resulted in manufacturers and importers cutting costs, putting off investments, and postponing essential business deals to reduce the impact of the trade war. Many industries have been affected by this trade war, but many have suffered more than others.
The energy sector is one of the industries that have been affected profoundly by this trade war. Steel and aluminum play a significant role in the American energy sector since it has built solar panels, distribute electric power, and construct oil pipelines, among others. With the U.S. increased the number of imports on these materials, there has been a spike increase in energy production, showing the importance of trade between the two companies. As a result of the trade war, the energy costs for every business will increase, and many organizations may abandon the expensive clean energy and start using dirty sources of energy that are less expensive. Besides is very unfair for any business, and a result, many companies that heavily rely on power will go under or even cease to exist if the trade war continues (Lau, 2019, 1950012).
Automobiles are another sector that will be affected profoundly. With China and the U.S. being the largest economies in the World, they provide the largest market for automobiles. American automakers export most of their products to the Chinese market. As a countermeasure launched by china, all cars are now charged tariffs at forty percent compared to the average fifteen percent. This trade war will profoundly impact auto parts sellers hence are exposed to business risks that other industries are uncertain too. It is clear to see this trade war promotes equality in the business industry since the ripple effects of this trade war will reach many businesses that were never involved in the past.
With no common language between the citizens of these particular countries, the translation industry will also be profoundly affected by the impact of the trade war. With the rapid development of technology, many companies from these countries have been able to invest in different countries. The Asian market helps American companies in the region to grow at rates higher than four percent annually, showing the importance of ethical business cohesion between the countries for the sake of these companies (Qui et al. 2019, 164). It is vital for any company investing in china to have localized services hence the need for a translator. But with fewer companies willing to invest in China, the industry of translation will be profoundly affected.
Another business sector that has been profoundly affected by this trade war is the food and agribusiness industry. The Chinese government cut off imports of different farm products, which they regally imported from the U.S. Many of the American farmers are finding it very hard to sell most of their products since they relied heavily on the Chinese market. Tractor manufacturers and farm input sellers are also feeling the effect of this trade war. Food processing might be at risk of laying off some of their workers or even shutting some of their plants if these issues continue to escalate.
The Tech sector is another is being affected profoundly by the trade war between two of the largest economies in the World. Many of the tech giants in the United States have opened outlets in china, and the same case applies for Chinese to teach giants investing in the United States. Also, these tech giants playing a vital role in their respective government’s economy; there will be a negative financial effect for each country. These companies also provide essential services and products for many customers who rely on technology to make revenue. Being very unfair for the customers since they are the ones su8ffering while these economies battle on a global level. The environment is also suffering because of this trade war since various crops absorb the different harmful situations, and the decline in their production has resulted in increased water pollution.
Corporate profit is to drop with the trade war affecting various aspects of the corporate world. With tariffs imposing by the two countries, many companies will have to cut their profit margins to reduce the impacts of these consequences. The Chinese currency will drop, and this will also result in a drop in many currencies; hence the corporate profits for the U.S. will also drop significantly. China has high debt levels, and this trade war slows the economic growth of the country, and this puts the country in a difficult situation since it will be hard to deleverage the economy. This trade war, if it escalates more, will also result in U.S. inflation. With the U.S. government enforcing massive tariffs on two hundred billion dollar worth of imported goods, this will affect almost 0.1% of the country’s G.D.P. (Li et al. 2018, 1560). Weaker emerging market currencies will also be affected due to lower import costs paid by the U.S., Showing how the impact is going to translate to other economies, thus demonstrating how unfair this trade is too many business enterprises. With all these effects happening on the national level, it is clear that the consumers and all markets will be directly or indirectly affected by the trade war.
With the respective governments investing in companies from the opposite governments, there have been many deals completed between business organizations from different countries. However, it is going to be heavily impacted by the trade war. Many businesses from the U.S. expecting investment funds from China will be affected profoundly even at some point, stopping their operations completely. The same applies to companies in China, hoping investment funds from the U.S. From this, it is clear why this trade war must stop because if it escalates, it will result in a global financial crisis. Therefore the respective governments must implement strategies that will be able to cushion much business from the impact of the trade war. The respective governments should also look forward to easing the trade tensions between these economies to keep the global economy at a balance. The trade war has proven to be very bad for every type of business and taking measures in reducing these effects.
References
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Qiu, L.D., Zhan, C., and Wei, X., 2019. An analysis of the China–U.S.U.S. trade war through the lens of the trade literature. Economic and Political Studies, 7(2), pp.1Awan, A.G.A.G., 2016. Wave of
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Lorida’s, K., 2011. United States-China Trade War: Signs of Protectionism in a
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Ibrahim, S.G., and Benjamin, M.U., 2019. US-CHINA TRADE WAR: MAKING AMERICA
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