Trump the Tariff King versus The People’s Republic of China

The latest update on the trade deadlock between The People's Republic of China and the United States of America and its repercussions on the global economy.

“Tariffs are a beautiful thing… when you have all the money.” argues US President Donald Trump in the middle of an interview for the CNBC’s channel “Squawk Box.” 

Tensions between the PRC and the USA have exacerbated over the course of Trump implementing his new favourite economic strategy. With hefty American tariffs on over $200 billion worth of Chinese goods and $60 billion American goods facing reciprocated tariffs from Beijing, according to the BBC, all prospects of reconciliation talks between the two superpowers seem quite bleak. 

With Mexico quavering under the threat of a trade war with the US, the impact of tariffs has further affirmed Trump’s faith in his current customs strategy and he seems confident in his ability to wear China down. However, while Trump wields this economic weapon with assurance, we cannot neglect the repercussions that the American and Chinese economies have already faced and the potential plight of the global economy.

If these tariffs endure, all deprecations in economic output can be made permanent, according to analysts from the IHS Markit. Fluctuations in price signals can lead to the inhibition of maximum productivity for products worldwide. On a macroeconomic scale, when the US faces a new tariff, it loses both GDP and exports. Other countries suffer from demand for their exports, which in turn debilitates the global economy. 

It seems that there is little to be gained from this trade war and as for Pakistan, with political unrest and elevated oil prices, the timing is far from ideal. The silver lining for exporters in Pakistan, however, is that China (according to The News) needs solid, long-term alliances that can support its increasing demands. With increasing exports, the Pakistani economy might just benefit from this cold war.

Meanwhile, with Trump threatening to tariff another $300 billion worth of Chinese goods (as per CNN) and Xi Jinping poised to retaliate, we can only imagine the tensions between these two superpowers being further cultivated in the 2019 G-20 Osaka Summit this June.

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