Are US And China Heading Towards a Trade War
According to the reports, president Trump’s best economic advisors are heading to Beijing this week. The purpose of this visit is to prevent a possibility of trade war between China.
Steve Mnuchin and Robert Lighthizer along with more economists will be meeting Chinese officials on Thursday, as well as Friday, and discussions of the trade disagreements between both countries will take place.
US says China should start importing more American goods, and in addition to that, China should also stop asking American companies to give their intellectual properties to China if they are willing to do business there.
At the current state, it seems that the talk between both countries is going to be difficult as China has said that they are going to refuse two of the aforementioned demands made by the US. As for the US officials, they have stated that the optimism is not on the higher side.
However, if both US and China do come to an agreement, the agreement would then help decrease the tension that is rising between two of the strongest countries and economies in the world. At the same time, if both countries fail to come to an agreement, things can go wrong really fast, and there can be a trade war.
What exactly is trade war, and how can it effect an average citizen? Let’s discuss that further.
What Does Trade War Mean?
In all honesty, understanding trade wars is not difficult, it could happen because of several reasons like one country increasing the tariff rate on the other country, but in the given situation, it is because China is not agreeing to terms that are presented by America. A trade war starts when one country thinks that one country’s trade practice is not as fair.
A trade war can also commence because sometimes, the countries end up misunderstanding the advantages of free trade.
When a trade war starts, it starts by affecting one sector, however, it can get worse and start affecting other sectors as well. In a similar fashion, when a trade war starts among two countries, it can end up affecting more than one country, even if the countries are not involved in the trade war at all.
Are US And China Going on a Trade War
So now that we have understood what trade war means, the question that most people have is whether both countries are on a trade war or not. According to some experts, both countries are engaging in something called pre-trade war.
At this point, we can’t say what is going to happen in the future; both countries are holding a pretty stern stance and so far it does not seem like one of them is going to offer some relaxation to the other. The scary part here is that if these countries do go to a trade war, the effect will be seen throughout the world economy as both US and China are the largest economies in the world.