What is a trade war ?
We have seen many wars before , some of the famous once are World war 1 and 2 , American war, Vietnam war etc etc . But all the above wars were involved with ammunitions and direct killing or massacre of innocent civilians and armed militants . One of the most deadliest war ever fought was world war 2 which killed more than 60 million people.
We have seen many wars before , some of the famous once are World war 1 and 2 , American war, Vietnam war etc etc . But all the above wars were involved with ammunitions and direct killing or massacre of innocent civilians and armed militants . One of the most deadliest war ever fought was world war 2 which killed more than 60 million people.
The above said war is different from trade war. In trade war countries tries to destabilize their opponent countries financially by imposing higher tariffs on imports (from opponent country) and to retaliate this the opponent country also does the same which as a result reduces international trade.
For example let's take the ongoing trade war between US and China. US started this war by imposing a tariff on steel imports stating national security , even though US president decision was taken by special status which is given to the US president in 1962 , according to US constitution only Congress body can impose tariffs. Trump cited national security and increased the tariffs on steel imports . But China took this a bit personal because world's 50 % steel production is supplied by China . Which resulted in a trade war between two. US also imposed increased import tariffs on Japan , Russia , EU countries ,even though at first Canada and Mexico were a exempt then they were added on May 31th 2018 .
South Korea as a aly country to US was a exempt and South Korea agreed to increase the export twice. As a relaliating measure , EU imposed a tariff on $3.2 billion products from US .Germany imposed a tariff on American automobiles in return America imposed a terrific of 25 % on European auto.China has also imposed increased tariffs on American products , Mexico is in talks to increase the tariffs on American products . Trump as on date has imposed higher tariffs on China goods worth 200 billion $ . It is stated that half of all China products imported by US are subjected to higher tariffs.
For example let's take the ongoing trade war between US and China. US started this war by imposing a tariff on steel imports stating national security , even though US president decision was taken by special status which is given to the US president in 1962 , according to US constitution only Congress body can impose tariffs. Trump cited national security and increased the tariffs on steel imports . But China took this a bit personal because world's 50 % steel production is supplied by China . Which resulted in a trade war between two. US also imposed increased import tariffs on Japan , Russia , EU countries ,even though at first Canada and Mexico were a exempt then they were added on May 31th 2018 .
South Korea as a aly country to US was a exempt and South Korea agreed to increase the export twice. As a relaliating measure , EU imposed a tariff on $3.2 billion products from US .Germany imposed a tariff on American automobiles in return America imposed a terrific of 25 % on European auto.China has also imposed increased tariffs on American products , Mexico is in talks to increase the tariffs on American products . Trump as on date has imposed higher tariffs on China goods worth 200 billion $ . It is stated that half of all China products imported by US are subjected to higher tariffs.
Impacts of trade war:
America's decision on increasing the tariff by citing security reason stating that US should be dependent on ammunitions making instead of relying on countries like China is just a rhetorical.
America is trying to create local jobs as much as 170000 but affect jobs of 6.5 million jobs (people who work in steel aluminium industries ) which results in increased production cost which will be passed on to the customer resulting in higher costs.In a long term it will adversely affect economic prospectus . Even though at first it might increase domestic companies profit without foreign companies domestic companies will never try to innovate which will result in decreased quality of goods. If the ongoing trade war is gonna continue then it is said that the world trade growth will slow down by 0.4% .
America's decision on increasing the tariff by citing security reason stating that US should be dependent on ammunitions making instead of relying on countries like China is just a rhetorical.
America is trying to create local jobs as much as 170000 but affect jobs of 6.5 million jobs (people who work in steel aluminium industries ) which results in increased production cost which will be passed on to the customer resulting in higher costs.In a long term it will adversely affect economic prospectus . Even though at first it might increase domestic companies profit without foreign companies domestic companies will never try to innovate which will result in decreased quality of goods. If the ongoing trade war is gonna continue then it is said that the world trade growth will slow down by 0.4% .
Comments