Thursday, September 20, 2018

The US-China Trade War is Imminent

Image credit: South China Morning Post, September 20, 2018

I had mentioned in my post "Loyalty to Najib Razak" published on April 03, 2018 that Donald Trump’s decision to enforce levies on a range of products will invite retaliation and possibly, start a trade war. 

The tariffs and threats made by the US of A have been specifically targeting China and the situation is set to escalate and get worse. 

Talks between the two countries haven’t been productive and it’s really worrying. 

I don't see an end in sight because Trump persists in being infuriatingly provocative and maddeningly belligerent. 

In fact, on Monday, the US President (left) imposed 10 percent tariffs on about $200 billion worth of imports from China, and threatened duties on about $267 billion more if China retaliated. 

If the idiot carries through his intentions to foist even more tariffs on even more Chinese products – it is not just China that’s going to suffer but the US too will not be spared. 

According to DBS's chief economist Taimur Baig, an all-out trade war could shave 0.25% off the GDP of both economies this year. It gets much worse next year – with both countries seeing a reduction in growth of about 0.5% or more (BBC News, July 05, 2018). 

Baig adds that "considering China grows at 6-7% and the US at 2-3%, we believe the damage would be greater to the US than on China". 

Nobody really knows how bad it can get. If history is any guide, then past trade wars have led to deep economic malaise. 

This increasingly protracted trade dispute between the world’s two largest economies, if left unchecked, can potentially spiral out of control. And this will end up not just hurting their own economies – but unavoidably also affect the rest of the world. 

Already, Chinese news agency Xinhua reported on Wednesday that Alibaba chairperson Jack Ma (right) said the company can no longer meet their promise to create one million jobs in the United States due to the two countries’ trade tensions. 

Ma added that the trade frictions would lead to “a mess” for all parties involved.

Thanks to Trump, a million American jobs have gone up in smoke!

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