Last Week, In a surprising statement, The U.S. President Donald Trump raised tariffs on Chinese goods of worth $200 Billion from 10% to 25% form immediate effect. The two days meeting with a little hope of ties between the two countries ended on Friday as a futile activity and finally, the U.S. went by the plans of raising tariffs on Chinese goods. Soon after this, the Beijing Says, we will retaliate but how not specify now.
After going for it what we see:-
1)Firstly, As the meeting goes ended in deadlock. Both the countries are not looking in a mood to reconciled here and so trade war continues.
2)As per the statement, If China will retaliate with imposing higher duties on the US goods. As of now not decided yet how and when. In one case, The US will not take the pain and looks for the resolution. But in another case, if the US retaliates with the fresh imposition of tariffs on Chinese goods worth $325 billion as mentioned. The situation to get more serious and cause damages to the world economy by every retaliation.
One thing is for sure, that the US may keep imposing new tariffs on China but will not do it on its own cost, So till that time, some more imposition like this may be there.
3)Finally, Trade war is not good and the two economic power engines trade war not only affect both the economy, but the global economy as a whole and the result can be horrible. The world financial market has losses of around $2.1 Trillion so far from the trade war in last 5 days. So sooner or later, the only option left is a free trade policy.
- Short-Term:- Raising tariffs and implementation of laws take time, so it has a very limited effect in the short run.
- Medium-Term:- In Medium-term, Trade war will start hurting both the economy and if this time utilized rightly this can be converted into an opportunity for the Indian economy.
- Long-Term:- In the long term, the trade war fire will catch the global economy and in this case, even the Indian economy is no exception.
Note:-In our opinion, these are the above possibilities and If the trade war continues for a prolonged period the financial losses will be so big that it may push the global economy into the recession.
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