United States (US) and China are locked into a bitter trade battle. Trade War is basically a situation where countries restrict each other’s trade by imposing tariff or quota on imports. Over the previous year, the two largest economies in the world have enforced tariffs on billions of dollars’ worth of goods of each countries. US president Donald Trump has long accused China of unfair trading practices and theft of intellectual property. While China on the other side believes that US is trying to curb its rights.
Negotiations are continuous but have proved to be a failure. Both parties avoid roll back on tariff thereby leading to perpetual conflict.
Initially US started by imposing tariffs on as much as 25% on USD 34 billion on Chinese imports to which China responded by retaliatory tariffs of 25% on US goods worth and equivalent USD 34 billion which included inter alia soyabean, automobiles, and marine products. The latest round targeted Chinese imports, from meat to musical instruments with a 15% duty. On the other hand, Beijing hit back with tariffs ranging from 5% to 25% on US goods. Its latest tariff strike included a 5% levy on US crude oil, the first-time fuel has been hit in the trade battle.
Due to this ongoing trade war nine major economies around the world including the United Kingdom, Russia, Singapore are on the brink of recession or already there. According to Bloomberg Economists report, uncertainty over trade could lower world domestic product by 0.6 per cent in 2021. In the recent past, central banks across Europe, Australia and Asia including India, have already cut interest rates in response to the broadening fallout from the trade war, or are preparing to do so.
The tariff imposed by both the countries are said to damage trade agreements under World Trade Organisation. This war could weaken investment, unsettle financial markets and slow the global economy. But while everything is up in the air currently, one thing is for sure: The tariff war between the world’s two biggest economies is going to hurt China more. While the US economic output is expected to dip by 0.6 per cent, China’s GDP is expected to lower by 1 per cent. Meanwhile China is already running out of US imports that it can target here on.
The Indian Lawyer