Question

Trump’s imposition of $260 billion tariff in the Month of May 2019 (taxes on imports to the US Market) on Chinese exports to the US has caused a global tension in financial markets and related business activities. In retaliation of Trump’s tariff, China also imposed almost similar amount of tariff on US exports to China about $200 billon. In response to this trade war between the US and China, the US stock price indices of the Wall Street plummeted in May and June 2019. Th stock market in Shanghai in China also crashed at the same time. The data on new job for the US economy in May showed a very slow rate of job creation at the same time. Given this scenario from the US-China trade war and given your knowledge on macro model of AD an AS, do you think the the retaliation of China in response to Trump’s Tariff would have a negative impact on the US economy in near future? Give your reason in your opinion as to why or why not the case.or paste question here

Answer 1

ANSWER-

The trade war has negatively impacted the economies of both the United States and China.In the United States, it has led to higher prices for consumers and financial difficulties for farmers. In China, the trade war contributed to a slowdown in the rate of economic and industrial output growth, which had already been on a decline. Many American companies have shifted supply chains to elsewhere in Asia, bringing fears that the trade war would lead to a US-China economic ‘decoupling’. In other countries the trade war has also caused economic damage, though some countries have benefited from increased manufacturing to fill the gaps. It has also led to stock market instability. Governments around the world have taken steps to address some of the damage caused by the economic conflict.

Internationally, there has been support for the end goal of the Trump administration's trade war of trying to change China's trade policies, while there has also been criticism of the use of tariffs and the trade war's negative economic impact. Among American industries, U.S. businesses and agricultural industries have opposed the trade war, though most farmers continued to support Trump. Among U.S. politicians, some have disagreed with the tactics Trump is employing, but most agree with the goal of putting pressure on China. As of late November 2019, none of the leading Democratic candidates for president said they would remove the tariffs, including Joe Biden and Elizabeth Warren, both of whom agreed the U.S. had to confront what they see as China's unfair trade policies