By Prarthana Mitra
The United States-China tariffs have gone into effect and over 1300 products are now more expensive than they were last week. To put things into more perspective, essentially, a trade war has broken out between two of the world’s largest economies, starting Friday.
China’s move comes after 25% duties were levied on a range of Chinese products. Immediately after the US slapped tariffs worth $34 billion on a range of Chinese products after threatening for months, China imposed equal and retaliatory tariffs targeting US-made electric cars, soybeans, poultry and pork.
— Slate (@Slate) July 7, 2018
As if this opening blow was not enough, US president Donald Trump continues to threaten China with additional tariffs of up to $500 billion, if it does not rescind the counter-tariffs.
Trade wars are bad and impossible to win
Although in nascent stages, the war shows no signs of abatement, even as economic experts around the world are condemning the US for starting the biggest trade war in economic history.
After the US and China imposed $34 billion in tariffs against each other, former US Trade Representative Carla Hills spoke to CNN, “I don’t think either side wins in a trade war.” She condemns the short-sighted move because most Chinese imports to the US are intermediate products which help in making US goods more competitive in the market.
President Trump disregarded countless warnings to embark on this reckless trade war that undercuts farmers and holds rural economies hostage. Unfortunately, Illinois will feel the brunt of China’s retaliation. https://t.co/90UoySLoLV
— Senator Dick Durbin (@SenatorDurbin) July 6, 2018
Republican Mitt Romney is also not one to champion the asinine trade war and he tweeted his feelings on the ongoing situation.
My thoughts on the trade war. pic.twitter.com/uegY4eUGjR
— Mitt Romney (@MittRomney) July 6, 2018
Even American businesses that have long complained about China’s tactics said this could adversely impact US firms and manufacturing units with operations in China. Notwithstanding the debilitating effect it will have on the job market and manufacturing and agricultural sector, cost of living is also expected to hit the roof if the war remains unmitigated.
Unprecedented and unwise, this tariff war could bring the entire world into an economic slowdown. Political scientist from London School of Economics Brian Klaas tweeted that Trump may be threatening the very fabric of global stability by starting a rapidly escalating trade war.
Additional U.S. tariffs on Chinese products worth $34 billion have been made effective. What do Americans think of the trade war? pic.twitter.com/KjlpT2dTDv
— China Xinhua News (@XHNews) July 7, 2018
Two can play the game
The ramifications of the war stand to hurt the Chinese economy more than the US, and could even amount to a nuclear war, according to Fox News. China imports only about $125 billion worth of goods from the US, whereas China’s exports amount to something over $500 billion. However, Xi Jinping has more allies than the US at this point, as Mexico, Canada, the European Union, even India issued fair warnings of retaliatory measures on US imports.
If extended indefinitely and escalated torrentially, this could have disastrous consequences. The question at this point, therefore, is how to go forward without causing colossal collateral damage. Opposition parties from both nations and international diplomats agree that Trump and Jinping need to find a common ground to resume negotiations that go beyond protectionist foreign policies. Public interest must be the foreground for agenda-setting, to avoid the war from drowning the rest of the world in an irrevocable economic crisis.
Prarthana Mitra is a staff writer at Qrius.