What is a trade war?
A trade war is an economic conflict resulting from
extreme protectionism in which states raise or create tariffs or other trade
barriers against each other in response to trade barriers created by the other
party.
The trade war between 2 superpowers, USA & China
emanated when the US imposed 3 rounds of tariffs on Chinese products last year,
totalling $250bn worth of goods. It followed up with US announcing a list of
1,300 Chinese exports which the country plans to hit with 25% tariffs. The
imposition of tariffs was planned to punish Beijing for restricting US
investment in China. China retaliated in kind by announcing tariffs worth
$110bn. On May 16, 2019 US Department of Commerce announced the addition of
Huawei Technologies Co. Ltd which effectively bans US companies from selling to
the Chinese telecommunications company without US government approval. This was
a big hit for China, in response China announced that it will establish its
very own unreliable entities list.
The WTO calculated that between October 16, 2018 and
May 15, 2019, there were 20 new restrictions introduced between the world’s
most powerful economies, covering trade worth $335.9bn
These constant attacks and counter attacks in terms of
trade policies between the 2 nations has led to serious tension in the world
economy. Thus, to discuss the ongoing trade dispute, the Presidents of both the
nations have confirmed, that they will meet in person on the side-lines of the
G20 Summit in Osaka on June 28-29. But after this agreement US President Donald
Trump announced the addition of 5 new Chinese entities to its list, barring
them from buying US parts without prior government approval. No actions against
this had yet been implemented by the Chinese President, but if US continues
provoking China, maybe there will be no one to one meet, as decided, during the
Summit.
Thank You
Regards
Author- Harshala Gidh
Kautilya
IBS Mumbai
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