My take on the growing Sino-US trade war

The commercial battle between the United States and China heated up on Monday as the economic powerhouses slapped each other with the largest rounds of tariffs yet, unleashing punitive duties now on roughly half of their traded goods. US president Donald Trump imposed fresh levied on US$200 billion in Chinese imports, prompting Beijing to respond with tariffs on US$60 billion in American good, approaching the point of running out of US products to target.

As discussed in my last video, the trade deficit for the USA with regards to China stands at around 350 billion dollars. To be more specific, in 2017, The China imported only 130 billion dollars’ worth of USA goods in contrast to 505  billion dollars of goods exported to the USA  from China.

Neither of the world’s 2 largest economies showed signs of backing down, and there is no further trade talks scheduled to resolve the dispute. Thousands of goods now face border taxes of up to 10 per cent, including grocery staples, household objects and industrial equipment. Economists are predicting the cost of food, clothing, furniture and cars to swell, resulting in unemployment across industries in both countries.

Mr Trump even warned this month that retaliation from Beijing would spark another set of tariffs on US$267 in Chinese goods, erecting financial barriers on virtually everything that the US imports from China. Even though China cannot respond on the same dollar to dollar value on the tariff situation, they have vowed to respond with ‘’greater qualitative measures’’. Some officials feel that this would mean stalled visas for American businesses, delayed licenses and spikes in port inspections.

The rise of tensions in the trade talks comes amid stalled joint-military talks after Chinese officials cancelled their visit to Washington to address the various issues at hand.  Beijing abandoned the defense related conversations in response to American sanctions imposed last week on Chinese military personnel for buying combat aircrafts and missile supplies from Russia.

I feel that the escalating trade tensions are more of a battle between the egos of 2 world superpowers as President Xi is not going to back down to USA’s threats however, they would have to understand that this will affect the consumer in the medium to long run. There will be lower disposable income as consumers save less due to higher taxes, there will be higher unemployment as Businesses cut costs to increase profits amid higher taxes and we could already see the wave of protests happening with a coalition of more than 80 industry and local groups coming together to protest against the intensifying economic conflict.

Moreover, the tariffs are set to hurt Chinese consumers more as they faced a currency down more than 5% this year against the dollar. Trade talks are expected and very much needed in the coming days to slow down this clash of the titans.