U.S-China Trade War-New Tariffs

Author : Acumen Research and Consulting

The United States and China are the world's two most effective trading economies. America has leading sectors such as technology, agriculture, retail and so on whereas China leads electronics, vehicles and so forth. The world's share markets and companies are influenced by these financial giants. However, the US recently decided to introduce a tariff on imports from China of over $200 billion. Not only in the 2 nations but on the world markets, this could have a big impact on the global economy.

America chose to follow the approach of 'America First.' The primary aim is to create more employment in the U.S. by promoting the development of local companies. Local producers and companies, in particular from China, have enormous competition from cheaper imports. It is therefore hard to compete with Chinese prices unless local products have a preference or an advantage. In view of this, the U.S. has chosen to have tariffs or taxes on products imported from China for approximately 200 billion dollars. This would assist local companies in the United States to flourish.

All these products would have an additional 10-25% tax as a goods tariff imported. Thus these products in the United States become more costly and imports decline. This would allow local American companies to boost revenues, given the restriction of competition from imported Chinese goods. This is mainly because the trade deficit gap between the two states has increased the U.S. has taken that audacious move. Over the years the imports of U.S. originating in China have surpassed their annual exports. As a result, Chinese products flourished in America at the expense of local goods.

There are a number of imported Chinese products facing extra American tariffs. China would be charged approx. 5 % extra for aircraft, electronics, computer, clothing, etc. Also an additional 10 % would be paid for food and beverage goods such as meat, wheat etc. More than 6000 Chinese products imported under this situation are projected to be charged with an extra tariff. That means more than 50% of the 500 billion dollars of Chinese imports into the United States will be subject to this extra tax. That would generate a major imbalance between the two financial giants ' trade relations. Chinese imports, on the other side, almost 130 billion dollars in products from U.S., out of which 50% would be under Chinese radar.

The US-China trade conflict has just begun with both business energy houses demonstrating their strength. Although both nations are moving forward, they want to demonstrate their power as a worldwide company leader. It is nevertheless crucial that the U.S. and China are both rational in demand and guarantee smooth global trade in the interests of worldwide business.