US-China trade war effects on global economy

Global economic conditions are being negatively impacted by the trade war between the two largest economies in the world, China and the United States. The trade war between the United States and China has emerged as a significant economic controversy of the 21st century. Elevated tariffs and trade obstacles have caused disturbances in supply chains, escalated expenses for enterprises and generated unpredictability for investors and customers. Other nations that trade with the US and China are also impacted by this war. Global attention is focused on the ongoing trade war, anticipating its outcome and the long-term effects it will have on global trade and economic stability. The conflict marks a dramatic divergence from the Post-World War II trend toward globalization and free trade, as evidenced by the series of rising tariffs and repressive measures.
By 2019, US had imposed tariff on Chinese product worthwhile $360 billion while China imposed tariff on US with worth $110 billion. This is not only hurt their bilateral trade but also effect on global supply chains. According to estimation of International Monetary Fund (IMF) trade war among those nations reduce global GDP by 0.8% in 2020, including loss of about $700 billion. This slowdown economic activities globally, huge affecting on everything from industrial to agriculture sector. On 6 July 2018, US impose 25% tariff on china product accounted $200 million and while when china impose 25% tariff on US export accounted value $60 million. US exported value to china accounted for $130 billion while china exported value to US accounted for $505 billion.
China has power to influence jobs creation in US because they have higher export shared in US market, US impose huge tariff on china product 18 August 2018, price of China product rise in US market because consumer have to pay higher price for China products. China is less impact on US trade because US have keeping larger shared in global market, and US is accounted low share of exported product in China market.
China will be negative impact by US trade war due to higher trade cost or deficit and it is more than production and employment cost. This negative impact is proposed by tariff and non-tariff trade war. Tariff is protection for larger countries to protect their domestic industry from higher competition in global market. Trade war is not impact only their domestic market, also effect on global market due to their policy.
During this time, protectionism became increasingly prevalent in trade policy. In an effort to close the economic gap with China and defend domestic sectors, the US took the “America First” position. In addition to tariffs, measures were implemented, citing national security concerns that restricted access to Chinese tech companies such as Huawei. In contrast, China accelerated the development of its Belt and Road Project, which aims to improve global trade infrastructure, widen its trade collaborations and eliminate its reliance on the US market.
Trade restrictions brought about by these measures have had far-reaching effects. For instance, American farmers suffered huge losses because of their reliance on the Chinese market. US soybean exports to China fell by 75% in just 2018 alone. In the meanwhile, rising import component costs caused Chinese manufacturers to struggle, raising consumer prices and lowering their ability to compete internationally. The unpredictability of trade policy also discouraged investment, as global corporations chose to move their operations to avoid tariffs and reevaluate the way they planned for their supply chains.
The US-China trade war has left the future of international economic activity undetermined, but there are a number of obvious avenues for resolution and adjustment. Reviving international trade agreements and institutions is one recommendation. Trade disputes might be handled more skillfully if the World Trade Organization is strengthened and its dispute settlement procedures are followed. Furthermore, regional trade agreements provide alternate avenues for economic cooperation, minimizing dependency on any one’s bilateral collaboration. One example of this is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
One such suggestion for reducing the negative impacts of trade interruptions is for nations to invest in technology and homegrown businesses. In this regard, the United States may strengthen its manufacturing and technological industries to reduce its reliance on imported parts. China may also keep advancing its efforts to lead the world in both environmentally friendly growth and technology. Future trade disputes could be mitigated by expanding one’s market reach into developing nations and diversifying one’s trading partners.