Question

As you may notice a true trade war between China and the U.S and the same with the European Union. Could you explain what's going on and how this disorder and disagreement in macro-economic policies will impact the international economy and impact the US economy? explain

Answer 1

A trade war is a back and forth dispute wherein a country imposes tariff on the imported goods of other country in order to restrict trade in response to this the other country also imposes taxes on imports on the contrary to it the US raises concern about theft of the intellectual property by the China.

Trade is a effective measure to increase the economic growth.The IMF have said the growing protectionism would hamper the world economic growth.Taxing imported goods would make the goods costlier for the cunsumers within a country would result in decrease of household consumption which is not good for the economy also some time in economics it is less costly to import than to produce so discouraging imports will results more costly production hence trade war damages busineses as well as household confidence. It creates an environment of mistrust and fear certainly not good for international economics.By imposing taxes on steel and aluminium The agriculture sector in US fears the counter tariff that will be imposed by the Chinese government .Also the extraction of steel and aluminium is costly than imported the price to be paid by US consumer increases hence hamper the household consumption which is bad for US economy