Introduction

In this paper, the trade war in-between the United States of America and China is being discussed. The main point which is evaluated in this statement is with the tariffs or quotas, which has been imposed on imports from foreign countries, so many countries started to protest against this policy. The president of the US limits the technology transfers to the organizations of China. China wants foreign companies who are interested in selling their products in China (Lee, 2019). There is a negative effect on the economy because of the trade war, as both the countries costs many job opportunities. At the time of imposing tariffs, inflation also triggers as the price of the products increases at the time of imports.     

Discussion

The trade war of the United States of America and China started when the president of America Mr Trump decided to limit the technology transfer to organizations in China. The organizations who were working on the plan of “Made in China 2025”, which includes robotics and aerospace was ordered from the administration to stop subsiding. China was also accused of using unfair trading practices and intellectual property theft (He et al., 2019). The tariffs were imposed mainly to reduce the deficit of US trade, which was mainly done because of the imported products and automobiles. After the announcement of President Trump, there was a tumble in stock markets for the trade war between China and the United States of America (Cavallo, Cal & Laski, 2019). There was a trade insufficiency of $419 billion in the year 2018 between the countries. One of the main reason for imposing tariffs is that the organization is of America, but their manufacturing process is done in China, but at the time of taking the goods it will be considered as imports in America (Lukin, 2019). Thus, Trump decided to stop the manufacturing organizations so that it will reduce some of the trade deficits. There is the imposition of three tariffs which is a total of $250 billion by the Government of Trump. As per this data, it has been estimated by the Federal Reserve that it costs an average of $419 household per year (Li, Balistreri & Zhang, 2018). After that, on 20^th May 2019, there was an imposing of the fourth tariff, which raises tariffs up to 25% on goods worth $200 billion (Amiti, Redding & Weinstein, 2019). After this incident, China also retaliated a tariff of 25% in the United States, which amounts to $60 billion of goods. Due to this, there are problems that arise related to the investors as China has to sell, which amounts to $1.1 trillion in US debts (Pangestu, 2019). One of the most growing sector in China was the telecom industry, in that sector, as there is a violation of US guidelines, there is an imposing of tariffs. The economy of China is getting effected from this tariff impose as most of the manufacturing plant which was run by America cannot manufacture further as there is a ban imposed by the administration of America (Lee, 2019).

The main reason behind the US-China trade war was that China was exporting the Chinese goods in an illegal process. As a result, the Government of the United States started to implement tariffs on those Chinese products. This hampered the GDP growth of China. Consequently, China retaliated by implementing tariffs on those goods, which they import from the United States. In this way, the trade war in-between the two largest countries started. This cannot be continued for a long time because this is hampering the United States as well as China’s Gross Domestic Product growth rate. Hence, the solution should be taken into consideration by both the countries government. The Chinese Government should focus on the method they export their products to the United States. They should stop exporting on an illegal basis. If this situation is taken into control from the Chinese government end, then the Government of the United States will remove the high tariffs, which was imposed on the Chinese commodities that have been imported by the United States. The initiative taken by the government of United States of removing the tariffs on the exported goods made by China will influence the Government of China to remove the tariffs on the products which is imported from the United States (Thehindubusinessline.com., 2019). Hence, China will stop retaliating. This will help in improving the relationship between both countries. If the following initiative is taken by both the countries then in China and the United States of America, more jobs will be generated. This will help in the growth of the employment rate in the two largest countries (the United States and China) around the globe. The currency settlement between China and the United States will help in restricting the trade war between them. The currency agreement will help the countries to make the transaction in their own currencies (Economictimes.indiatimes.com., 2019). As a result, the transaction, which was being done in a long process, can be now time-consuming. Even the money transaction between the United States of America and China will become easier. This will help in trading more goods between themselves. Thus, the economic growth of China, as well as the United States, which was slowed down because of the trade war between them, will now improve. These are a few of the recommendation that is suggested in order to eliminate the ongoing recent trade war between China and the United States of America.

Conclusion

According to the above discussion, it can be concluded that there is a contradiction arises between the United States and China regarding trade war. One of the important reason is the tariffs imposed by the Government of America in China. Due to this tariffs, there was a negative impact on the economy of China. There was a reason why the President of America Mr Trump has imposed tariffs, as it will help in reducing the trade deficit in America, thus it will create more job opportunities in that economy. After the imposing of tariffs, there was risk involved related to investment, exports and it has also weakened the manufacturing process. As because of this trade war between the US and America, another economy is also getting. So, they try to solve this issue as China has promised to deliver quality products to America. As it is one of the biggest trade wars in economic history, as there was a problem with import and export. As the tariffs were imposed by the US, the trade deficits which was happening is that they were enjoying a high standard living as they are getting the products cheaper than they were used to get. It was believed by many of the policymakers that the tariffs that were imposed are harmful to the economy. The Chinese Government should take the initiative in improving their technique of exporting goods to the United States. Consequently, the United States Government may stop imposing tariffs on their imported products from China. As a result, the Government of China will stop retaliating. The essay also recommended that if the Government of the United States of America and China comes to a currency agreement among themselves, then the money transaction between them would become easier and time-consuming. Hence, if the following recommendation is taken into account by both the economies, then the trade war, which is going between the two largest economies, may come to an end.

References

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