The recent trade war between China and the United States could escalate to a warring economic crisis between the two countries and the world at large if the dispute will not be resolved in time. A number of economic experts admit that this war will be more detrimental to the US economy than China. This is due to the fact that The US depends more on China Imports to run and maintain its manufacturing industry and a cut in the imports will mean that the industries will lose raw materials leading to increased production cost.
Trade sanctions
On May 5, US President Donald Trump announced a drastic increase on tariffs from 10% to 25% on all Chinese imports which is seen as a way to regulate the imports and ultimately punish the Chinese economy. What president trump does not understand is that the US has a weak manufacturing and Industrial base and only relies largely on imports from China. Therefore, the trade sanctions against China will immediately create a negative impact on America’s economy. In what is seen as a factor that will greatly inflate the China-US misunderstanding, The US president confirmed a follow up on the trade sanctions imposed on Chinese products.
A trade deficit with China will lead to sustaining US retail economy and also lead to the growth of America’s Growth Domestic Product. Importing goods from China is a profitable venture whereby it is a source of wealth and profit in the US. This is because China is a low wage economy where its consumer commodities and products sell at relatively higher prices in the US market which can go to a record ten times its factory price.
Conclusion
China is rich in a global export market coupled with over 1.4 billion people and a strong internal market. The economic sanction threats by President Trump will not affect China’s economy thus, Beijing will not take it seriously because the US economy is highly dependent on China products.
