By Indrahang Lingden
In the summer of 2018, US president Donald Trump threatened to impose sweeping tariffs on China. So far US has slapped tariffs on $250 worth of Chinese products and has $325 more in its sight. Tariff was raised from 10% to 25%. On the contrary, China has retaliated by increasing tariffs on $60 billion worth of American goods.
While the trade war between two economic giants has escalated, who will win? Technically China might suffer more. The US imported record $539 billion in goods from China in 2018 while it only exported $120.30 billion in goods to China; a trade deficit of $418.7 billion. It means China sits on Trade surplus from the US. This explains China needs the US more than the US needs China.
IMF claims both the nations would see “sizable” losses in manufacturing as capacity moves towards Mexico, Canada, and East Asia if tariffs were hiked to 25% on all goods flowing between the two countries. The electronics and other manufacturing sectors in China would be hit hard and the U.S. agricultural sector would see a significant contradiction if the trade war were to escalate. Both countries will lose a significant number of jobs. It means 1 % of the workforce in the U.S. agricultural and transportation equipment sector and 5% in Chinese manufacturing other than electronics, furniture and jewellery.
The US has been the solo superpower after the end of the cold war. China is a fast rising power. The US is far ahead in science and technology and its innovation. While China has been investing hugely on innovation and technologies like artificial intelligence, quantum computing, 5G etc. The last of the ongoing trade war between these giants have not been seen. Should we worry? I believe with globalization, WTO and intertwined economies, there is minimum chances of an economic blood bath.
