After the prolonged trade war between two of the world’s largest economies, USA and China, things have finally settled down. The conflict stems from the promise made by the leaders of the two nations who had promised to pose new strict tariff on goods exchanged between each other.
According to William Dickens, an economics professor at Northeastern University , this will not impose any effect on either of their economies. However, things could get rough if the trade war behind these two countries escalates to a level where they deliberately instigate each other to act upon it.
Donald Trump, the President of United States, imposed a tax of 10 per cent on Chinese goods amounting to around $300 billion. In reprisal, the Chinese State Council declared to impose tax worth $75 billion on goods from the US. To reinforce such a measure, President Trump decreased the already present tariffs on $250 billion worth of goods and imposing a tax of 15 per cent.
After commanding many US based companies to cease business with Preside Xi Jinping’s country, President Trump, declared, in an interview that he expects both the countries to enter into a negotiation to deal with this situation.
According to Dickens, China does not bear the motive of directly attacking the US economy. As China’s move of imposing 5 per cent extra tax on soy beans was an attempt to curb the Midwestern farmers, who are a part of Trump’s domain.
Molly Callahan reports Dickens saying, “China is trying to make that base feel the pain in order to hurt the re-election chances of this administration that gives China the upper hand in negotiations.”
Dickens feels it is difficult to predict the future in such an adverse trade war. The situation is in a state of turn tables; the tariffs can be reversed any time. Businesses in these present circumstances have lost confidence to invest in such a fragile US economic situation.