A Different Kind of War
Gavin Schultz
The United States and China are recognized as having the world’s two largest economies.
And they’ve engaged in a trade war.
This could potentially leave one or both countries’ trade prowess in ruins. It is undoubtedly true that the United States relies on China for many things - almost everything we own contains the words “Made In China” on it somewhere. However, the future could hold devastating consequences for China as well, as China also relies on America as a steady trading partner. So with so much to lose on the line for both countries, what’s the motive behind this bold conflict?
In case you are unsure what a trade war is, a trade war is a conflict between two countries that is initiated when one country imposes trade barriers or tariffs on another country. The second country then does the responds by erecting more trade barriers or tariffs on the country that did it first. The motive for doing so is thought to be for economic security and autarkic (self-sufficient) positioning.
The Trump Administration believes it has the upper hand in the ongoing trade war. Ryan Woo and Kevin Yao of Yahoo Finance, in their 2019 article, wrote, “The Trump administration is considering radical new financial pressure tactics on Beijing, including the possibility of delisting Chinese companies from U.S. stock exchanges” (Woo and Yao 2019). Additionally, the United States looks to further damage China’s economy by moving some companies away from the communist nation. CNBC’s Jake Novak reports in his September 7th article,
Just five days after that trade war flare up, the Nikkei business daily reported on Aug. 28 that Google is shifting its Pixel smartphone production to Vietnam from China starting this year and that the company is also looking to shift some of its smart home speaker assembly to Thailand...It’s not that Google is the first U.S.-based company to announce some shift away from China; more than 50 other big names have moved out or scaled back (Novak 2019).
This is a big, bold move by Trump. The message he is sending to China is one of hostility and self-interest. By shifting technology production elsewhere, Trump is effectively saying “forget you” to China. And it seems to be working. The figure (below), taken from a 2019 South China Morning Post article, shows China’s GDP growth, which is at an all-time low.
It’s not just China feeling the pain in this war. Wars affect both sides, and this trade war is no exception. Numerous business owners are feeling the weight of the heavy tariffs. Virginia Harris, a BBC News writer, reported on some small business owners in her August 2019 article. Sherrill Mosee, one of the interviewed business owners, told Harris, “‘As a small business my finances were already a little tight. I had to figure out how I was going to get the money to operate the business. We're all paying for this, not [only] China,"’ (Harris 2019). Additionally, Harris reported on Litgear, a travel bag company, who has felt the full blow of the trade war. Harris writes, “When tariffs on some of those goods were hiked by 10% last December, chief executive Magi Raible had a feeling the matter might drag on for some time. She acted quickly to shift some production out of China to Cambodia. Later those tariffs were increased by another 15%” (Harris 2019).
Clearly, both sides are harming and being harmed in the process of trying to create economic reforms. While China may be trying to satisfy economic demands of their own or are simply responding to aggressive tariffs from the United States, it is unknown.
With talks set to begin in mid October, the world holds its breath. It is safe to say that everyone, even the countries not directly involved in the trade war, hopes for a positive, friendly outcome. Because when the two largest economies on the planet crash head-to-head, who knows what will come next?
Works Cited
“China Urges 'Calm and Rational' Resolution to U.S.-Sino Trade War.” Yahoo! Finance, Yahoo!, 29 Sept. 2019, finance.yahoo.com/news/china-says-companies-facing-many-094644914.html.
Harrison, Virginia. “US-China Trade War: 'We're All Paying for This'.” BBC News, BBC, 1 Aug. 2019, www.bbc.com/news/business-49122849.
Jakejakeny. “Tariffs Are No Longer China's Biggest Problem in the Trade War.” CNBC, CNBC, 7 Sept. 2019, www.cnbc.com/2019/09/06/tariffs-are-no-longer-chinas-biggest-problem-in-the-trade-war.html.
“Trade War Is Harming US Economy More than China's, Beijing Official Claims.” South China Morning Post, 18 July 2019, www.scmp.com/news/china/diplomacy/article/3019071/trade-war-harming-american-economy-more-chinas-claims-official.
I totally agree with this, I think that there is going to come a time where we aren’t always going to be trading with China. By switching things up by Trump, it is a big bold move of him. Since we both supply goods for each other, as we drift slowly away from them, they will most likely do the same. By us moving away, it’s not just affecting China, it is also affecting the United States because the supply of goods are decreasing. By the show of us decreasing trade rates, it is not only affecting China, but it is also affecting everyone inside of the US.
ReplyDeleteI agree that the trade war is bad and that it hurts both the U.S. economy and China’s economy. According to Kimberly Amadeo, trade wars occur when one country tries to create more domestic jobs by putting tariffs on imported goods. This causes the domestic product to have a competitive advantage over the imported goods because the domestic product is cheaper. Also, trade wars cost the economy jobs, and it “depresses economic growth for all countries involved” (Kimberly Amadeo), and it also creates inflation because tariffs increase the prices of those goods. If trade wars create inflation, costs the economy jobs, and depresses economic growth, then this trade war needs to end quickly. The tariffs are costing American households $1,245 per year, and the U.S. GDP has fallen by 0.6% according to Kimberly Amadeo. If the trade war doesn’t end soon, the U.S. economy may suffer another recession.
ReplyDeleteWorks Cited
Amadeo, Kimberly. “Why Trade Wars Are Bad and Nobody Wins.” The Balance, The Balance, 13 Aug. 2019, www.thebalance.com/trade-wars-definition-how-it-affects-you-4159973.
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ReplyDeleteThis is an interesting topic to talk about and a question to ask is: Is china only powerful because of America? When companies like Nike pull out of China, like you said, it had a great impact on China's GDP. Obviously a lot is made in China but how about if it wasn't? Would China be as strong as it is now? No China wouldn't be the same. That's why I believe no matter what happens, this trade war will be won by America because American companies practically hold China's economy up and without it, it would crumble.
DeleteI like how you talk about how the US responded to the the trade war, and how many US based companies are moving out of China. I also liked how you mentioned the tariffs and how that was the reason most companies were moving out of China.
ReplyDeleteNeutrality is a goal that is difficult to achieve, but your article is exemplifies the trait. Showing both sides of the argument equally is great to achieve that neutrality. You showed two sides, but this situation has several other sides that you understandably did not consider. Even though the world is not a zero sum game, there are losers and winners in your topic. You showed the two main losers, US and China, but you failed to show in detail about any beneficiaries. Thailand and Vietnam are benefiting, as you said, but by how much and to what cost? Are their any other countries that are benefiting from this as the economic output of both countries are going down, someone needs will supply that missing amount to reach the equilibrium: Who is that? Going into more detail about how out countries are benefiting will shift it to an global argument than just 2 countries.
ReplyDelete