The trade-war redux
The trade-war redux
I am a freelance columnist and an aspirant to CSS examination, based in Shikarpur, Sindh. I have been a regular writer to multiple English newspapers and magazines for 3 years.
Name: Wajahat Abro.
CNIC NO: 43304-4050864-9
(Cell no: 03323953309).
The US imposed tariffs on China for Trump claimed that China has been practicing controversial trade services. Literally, the US wants to paralyse China’s expanding role in One Belt, One Road (OBOR), Ancient Silk Road (ASR), China-Pakistan Economic Corridor (CPEC) and other game-changer projects which connect China with the world countries. It is also not out of confess to depict that America is threatened of Chinese tireless efforts in forcing foreign businesses to achieve its economic status in the world.
If we analyze the Chinese economy and its effective efforts, we may conclude that such tariffs, posed by the US on Chinese goods, will affect China a bit. Because, China is an independent economic nation which is very less dependent on American economy. When China’s exports to the US is less than 3 per cent, why would it be worry about such tarrifs? But China wants to become world’s largest economy, therefore, such a vicious trade-war will hinder its rapid economic growth. It is time both powerful nations chalked out an easy way to address the sensitive matter which not only affects their economies but also creates problems for the rest of the world economies.
Despite less dependent on America, Chinese officials have tried its diplomatic measures to persuade Trump by buying American oil and farm goods. But, Trump showed no signal to break-up the war. Considering this, Lu Zhengwei of Industrial Bank, a Chinese lender, says the staggered way in which Mr Trump is imposing tariffs suggests that he wants to leave room for talks. “It feels like a chess match,” he says.
The trade-war game has been under repercussion between China and the US for months. However, it is obvious that China has always denied the trade war but it claims to win if dragged deeply. For China, its currency, Yuan had drastically fallen by 5% as compared to dollar. As, the US has recently imposed tarrifs on the machinery and electronic products of China: at least 25% duties on $34bn-worth. In retaliation, China also follows tit-for-tat practice by imposing tarrifs on American goods on the same amount. The S&P 500, America’s leading index of big shares, has fallen by 5% since late January; the CSI 300, China’s analogue, is down by more than 20% over the same period. Besides, Trump has vowed to further escalate the fire of trade-war by imposing more tarrifs approximately $200bn-worth over Chinese goods.
Not only China but Turkey is also under the trade-war box of America. Recently on 10th of August, the Turkish finance minister— Berat Albayrak— drafted a new policy of economic development. But soon, Donald Trump— a greedy economic leader— tweeted that the US would accelerate economic tariffs on Turkish aluminum and steel products. Undeniably, Turkey’s currency Lira has been devalued 40 per cent against dollar by such economic tariffs since the start of new year. Amazingly, it is to be noticed that the US has always followed hard steps against Middle Eastern Muslims countries. Mayhem in Syria, destruction in Yeman, turbulence in Palestine and so on. Initially, Iran was highly sanctioned. Now, Turkey bears the same brunt of tarrifs which affect its economic, political and social setup.
Donald J. Trump has really been following his slogan “America First” since his first speech after being president of the US. Initially, he withdrew from the UN Migration and Refugee Compact Organization. Secondly, he denied to ratify the Paris Agreement to address the climatic challenges. Thirdly, he rejected UN Educational, Scientific and Cultural Organization. Fourthly, Trump went very hard against his allies at the G7 Summit. Last but not least, the US no more recognizes the UN Human Rights Council. However, many writers write Trump is an isolationist in a period of globalism where all countries are inter-linked to each other.
Interestingly, China can take initiative to strengthen its multilateral ties with US allies that are opposite to American agenda “America First”. No doubt, Trump has given free space to Xi Jinping to connect its economic cooperation with favorite US allies after the Trump’s acts outside of World Trade Organization. In this regard, China is trying its best to come close to European nations to connect them with its game-changer projects OBOR and SRI. If China succeeds, the US would no more hegemonic power as it has always shown an exceptionalist attitude on international front.
Moreover, most of the international historians depict that the US is likely following the footsteps of its worst history of Smoot-Hawley Tarrif Act of 1930s. The act converted the US under several repercussions: American national income fell by 36 per cent, unemployment 25 per cent, 40 per cent banks were permanently shut down and trade and investment declined drastically. The same happens now. Currently, America under Trump follows isolationism and protectionism policies which can be traced back to 1930s. Thus, such trade policies may lead America under the same danger zone of 1930s.
The trade-war waves will immensely stumble the economic juncture of both nations: China and the US. We live in a globalized and interconnected world, where no country can live in isolation. If a country follows isolationist approach by imposing tarrifs on consumer, the backfire effects would also disrupt the supply chain of producer.
Relatively, a think-tank— Dmitry Grozoubinski of the International Centre for Trade and Sustainable Development depicts the trade war as, “blowing up your own cities and wafting the resulting smoke across the border in the hopes it will sting their eyes.” Trump must understand that wherever the trade war reaches, whatever happens, but there would nobody be winner. Only the world economy would be appeared with challenging shocks. Avoiding the full-blown war and cooperating with each other is the mere remedy to improve world economy, peace and prosperity.