Question

What do you think are the effects of the current trade conflict between the U.S. and China on multinational corporations and businesses? (about 250 words)

Answer 1

The current trade conflict has been arising because there is widespread belief in the US government that the export of cheap good from China are flooding the US market and the companies have moved operation from US to China because of the low cost of Labor and other favorable policies however US companies operating in China have to go through many regulation and follow the government policies strictly. This trade imbalance has been a major point of contention and this has caused significant volatility in stock market especially after the US government put tariff on the import of goods and services from China. The effects of this has been mostly negative in terms of the excess volatility in the stock market, many companies are now finding it difficult to operate in China because of the tariffs imposed and this might affect the Chinese economy because Chinese economy is based on export of goods and services. They have been able to build a reserve of dollar and grown double digits for a significant number of years. The cost of labor also has gone up in China, some companies might shift their manufacturing because of the widespread negative opinion about China. The cost of production and quantity of production in the short-term might fluctuate in the short term. Because of the tariffs the export from China might now be more costly and that will affect the company’s earnings negatively.