A Way Forward to U.S – China Trade War

A Way Forward to U.S – China Trade War

U.S – China trade war is set on fire. Mediation of W.T.O between the two bitter economies can partially soothe the ongoing war.

The world’s two largest economies, U.S and China are stuck in a year-long battle. Recently, the International Monetary Fund has forecasted the drop-down of global economic output by 0.8% till 2020 due to U.S – China trade tariffs. 

Delegates in 2019’s World Energy Congress stated that the bitter trade war between U.S and China has also affected the oil industry on a large scale. The U.S being the world’s largest oil and gas producer as well as exporter shunned the supply to China. This ultimately led to a reduction in U.S shipments this year. Trump recently quoted, “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.” 

U.S has always been criticized for its unfair tariff impositions. Last year, it has imposed heavy tariffs on solar panels and washing machines.  

According to the South China morning post, U.S president Donald Trump has warned China to settle a war deal before November 2020 Presidential elections or it will be a tough war deal ever.

Earlier this month, both China and U.S have indicated to be benevolent with each other by the U.S suspending the tariffs due to the eve of the 70th People’s Republic of China and China reciprocated by exempting tariffs on certain goods. The gesture indicated to resolve the 14-month trade war that has hampered the trade of other nations as well. Though, both economies remained silent on key structural issues.

The consecutive Trump’s tweets and tit-for-tariffs have impacted the markets for almost a year. The marketers are of the view that if the trade war is not cool down it will have a negative impact on the individual companies. The trade war will reduce the flow of trade, will lower the investments and will lessen the job opportunities. Trade war will lead to a fragmented trade framework in the world. The increased tariff rate will have an impact on emerging industries such as electronics, agricultural farm produce which will eventually affect the market business. 

According to the Peterson Institute for International Economies, U.S has always defeated China in the past 16 years with a record of winning 19 cases from 23, with 4 cases pending.

Though U.S and China want to settle a war deal, they are not ready to take a backstep. However, if there is no intervention to put an end to the trade war, the increased trade, financial and economic integration of the two economies will be altered. The intervention of WTO has become a need of the hour. The assistance of  WTO will prevent the detrimental repercussions of the trade war. It is a time-consuming process, nevertheless, nations can resolve their disputes through WTO instead of raising tariffs.

According to the recent update, both countries have decided for face-to-face sessions to settle the war. U.S is keen to expand export opportunities for farmers by demanding China to strengthen the purchase of American soybeans and agricultural products. But it is said that there is a need to breach the gap between two nations rather than resolving trade deficits.

– Written by Supriya Khedekar

Business Writer

JSB Market Research

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