The Breeze

The Fears Of A Potential Trade War Against China

As the United States and China start throwing blows, who is going to be harmed?

Aidan Pollock and Aidan Karpicz

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Disclaimer: Due to the ever-changing politics, the situation might have changed in the course of writing, researching and reading this article, so some of this information could change, and we could be in the midst of a trade war when this article is being read, however unlikely. As we normally do historical articles, this article has proved to be even more difficult as the situation has changed several times while writing it, making the article also ever-changing.

Tensions are rising between the United States and China following both countries imposing tariffs, causing US stock prices to plummet as China places a $3 billion tariff on the exportation of 128 US goods. How did this event come to be?

It began on March 1 when United States president, Donald Trump, announced that he was going to impose tariffs on imported steel and aluminum. He claimed it would be put in place in order to protect the U.S.’s steel and aluminum industry

It would do this in theory, if not for the amount of steel and aluminum we import.

The U.S. does have a steel production base, but it does import a large sum of steel from entities such as the EU, Canada, and China, to name the largest of them. Unfortunately, due to a lack of foresight, this policy would increase the price of steel in the United States, causing the economy to slow down.

This policy makes sense from an American perspective, protecting domestic industry and restoring a favorable trade balance, but it causes other countries to be a little mad, most of all China. When the U.S. hit China squarely in the face with its tariffs, China threatened to uppercut the U.S. unless it gave up the fight.

Trump refused to step down, so China carried through and laid its own sucker-punch on the Americans: a $3 billion tariff on 128 American goods. In response, the United States published a list of 1,300 Chinese goods to be added to the tariff.

The escalation of the economic tension between the two countries has caused some experts to worry about a potential trade war between the US and China.

But what is a trade war? How likely is one between the two nations? What is there to fear from a potential trade war?

By definition, a trade war is “a situation in which countries try to damage each other’s trade, typically by the imposition of tariffs or quota restrictions.” Now as of right now, a full-out trade war is not in effect between the two countries. Rather, it would be classified as a trade conflict, but not a full out war. The situation still requires some escalation before it becomes a serious problem.

Although there are plenty of people who play up a possible American-Chinese trade war, experts say that such a conflict is improbable. This is because of the fact that China is very unlikely to escalate the conflict too far; American imports from China are annually valued about $480 billion, while Chinese imports from the U.S. are only valued at around $170 billion, nearly THREE times less. The truth is that if China continues to push the issue, the US will just have a reason to tax the nearly three times more money coming in from China. This to say the least would be a catastrophic policy, especially to the cheap consumer good market, which is why China will likely not push the issue.

Although, despite this, new information has to the attention of many in the United States. This information involves the Chinese government official named Wang Huning and paints this situation in a very new light. Wang Huning is a communist strategist who has spent most of his career seizing up the United States as a geopolitical rival. Recently though, Huning has been conferencing with some US tech companies regarding the United States, particularly President Trump’s seriousness regarding a trade war. The tech companies have responded with an answer more disconcerting than not, as they say, that the White House is most likely being very serious. Despite this information, Chinese President Xi Jinping believes that the US is merely bluffing and will eventually back off if the issue gets too hot. This could, in it of itself, lead to a trade war between the two economic superpowers.

The simple fact is that such a conflict would predictably be ruinous to the global economy. Exports and imports would decline precipitously, global trade would slow to a standstill, and the stock market would be facing a disaster. Possibly, due to modern globalization and the interdependence of today’s international economy, this might cause an economic depression worse than the Great Depression in 1929. No one wants to go through this decline just over two guys slapping one another and asking if the other guy gives up yet. There are just too many negatives that it makes any conflict unjustified.

As already listed above, the trade war wouldn’t quite be full of happy little clouds and trees as Trump predicts. This is pretty much common sense, even if you aren’t a professional economist. Americans who buy goods mostly from foreign markets, where they’re cheaper, would face higher prices. American business owners would face limited markets, making sales go down, leading to workers being laid off, leading to fewer goods being produced, and leading to higher prices, which creates fewer sales. Succinctly, this proposed trade war would be, at best, a moderate bruise on the U.S. and, at worst, a fatal blow to both the Americans and their government.

So when Trump considers that next tariff, he should consider his decision more carefully. Identify the problem and any possible solutions, analyze the pros and cons, and see if the decision matches up with his personal values. Being a businessman, he should understand that, in this situation, the cons definitely outweigh the pros, but it appears he is just looking to escalate it further.

Maybe this is because he wants to garner support from the average American, who might not understand all of the economic problems but does understand that American pride and honor is being insulted by the Chinese. They expect their president to stand up and fight; this quality is why many Americans voted for him over what they considered to be the “weak” and “cowardly” Hillary Clinton. But that choice will be left to President Trump and his administration, so we Americans better hope they make the right decision and don’t create a dangerous situation. History shows that one man’s decisions can decide the fate of an entire people, so all we Americans can do is sit back and hope for the best.

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The Fears Of A Potential Trade War Against China