The ongoing trade war between China and the United States is proving to be detrimental to the global economy. This is because the two countries are the world’s most significant economic influencers today. They keep the economy of the world in a healthy state. In past times, there has been little concern of a policy standoff between the two economic giants. Such polices would ensure that economic sabotage is prevented in any case scenario. However, the ongoing commerce war was thought to instigate a mutual fiscal pain for both countries. However, the current stand-off is proving to be a disaster.
The only way out of this dilemma is implementing trade policies that are meant to safeguard the interest of the parties involved. It is critical in the case that there may be any issue regarding the trade policies. The United States imposed tariffs of close to $50 billion on Chinese exports. The taxes by the Trump administration are meant to counter the intellectual property rights theft by China. The United States president got a direct response from China instigating him to push the tab to 200 billion dollars. With such high tariffs, there have been reports of China’s refusal to invest in US technology sector along with exports of particular goods.
Such moves widen the trade deficits between the two countries instead of closing them. It is catastrophic to the world economy as the two play a crucial role in the fiscal affairs of the globe. Thus, global markets are at stake as they are unstable because of the conflict between the two giants. Such impact is evident during the drastic drop in risk-oriented assets. With such responses from the market, further damage is likely to hurt the global market to a gigantic scale primarily. As for China, they have come up with strategies to beat the tariffs. It is good since they are trying to bring balance to the global economy that is somehow unstable. However, it dictates that the moves made by the United States will determine the outcome of the trade war. The two countries have something to lose if the fight goes on. It means that they are inflicting economic pain to gain a symbolic victory. After the great financial crisis, China is on the wrong side of the war. In the past, it has involved itself in twisting levels of control over markets and the world economy by utilizing punitive trade policies.