Question

In: Economics

what is the trade war with China?

what is the trade war with China?

Solutions

Expert Solution

Ans) Since a long time both US and China have imposed tariffs on each others goods. In this regard, US claims that China practice unfair trading practices and steals intellectual property rights. On other hand, China claims that , US wants to curb its growth. Which created tension between the two sides. Even during election campaigns, Trump threatened to impose 35% to 45% tariff on chinese goods.

So far US has already imposed tariff of $250 billion on import chinese goods and threatened to impose more. In retaliation, China has imposed $180billion of tariff on import of US goods. And tensions are only escalating with no party ready to negotiate. Further, both the economies are planning to further increase the tariffs.

Given that both China and US are largest economies of the world, the trade war will hit both side badly. It will severely impact social welfare of both the countries and result in destruction of economies on both side.


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