China Trade War
By Sricharan Guddanti
The China Trade War. If you dive into nearly any American politics right now, you are bound to hear this. And sure enough, this “war” is the most significant economic event in recent times. From China taking over as the new economic leader of the world to an economic market crash, this battle can affect the future of every existing country in unpredictable ways. But before I get into those details, some of you may be wondering: what is the China Trade War? Let me explain.
This event is not the typical war you think of when you hear the word “war.” The United States-China trade war is a fight for the power of being independent. A decade ago, the United States was the sole leader of the world, a monopoly without opposition. Now, China is challenging that title. In 2015, China launched a vision to become the most powerful of countries, calling on their companies to join them, giving private companies subsidies (money), advancing areas to gain access to technology, and forcing any company doing business in China to share all their trade secrets. Some say this plan is genius, while others disagree, but one thing is a fact: the strategy is made to solely benefit China. China has climbed up the charts, in terms of economy and power, and the only country stopping them now is the US.
China was coming too close. Americans were losing their jobs. China’s economy was thriving and it’s one competitor, America. In early 2018, President Trump decided it was enough; he announced that the US would impose a 10 percent tariff (a tax but for trade) on aluminum and a 25 percent tariff on steel. This left companies and countries around the world in shock. Why would President Trump do that? The reason is to promote manufacturing in the US, opening the market for new jobs and allowing Americans to have jobs. This was one of Trump’s promises in his election campaign back in 2016. In other words, when tariffs are imposed, it costs more for companies to import materials or products than before, pushing them toward making products in the United States rather than China (where many products are made because of the cheap labor). This way, America does not have to rely on China anymore; the US can make and sell products in its own country without having to rely on international manufacturers, giving them more power than ever before.
In the following days, the US made adjustments to their tariffs so they would target China specifically. Just a month later, China responded with tariffs of its own. As this trade war intensified, more and more products were tariffed and trade has become more expensive than ever before. So, let me answer this question: who needs who the most? It depends. Right now, it is all about leverage. The US owes China 1.13 trillion dollars, and that money is within US control. But China has cheap labor that many US companies rely on, meaning both countries have leverage. President Trump wants manufacturing jobs to come to America because of China’s vision of becoming the world’s superpower in the next six years; China overtaking the US is certainly not an option for Trump. Putting all details aside, who will win this trade war? As of now, no country has a significant advantage over the other, so it comes down to who can stand their ground and continue to “fight” the longest.