When elephants fight, grass suffers

China said on Monday it will raise tariffs on $60 billion worth of U.S. goods from June 1, in retaliation to the latest round of U.S. tariff hikes and Washington’s plans to target almost all Chinese imports. This is tit for tat from China.  Both sides will calm down in future.

Trade war pertaining to enhancement in tarriff by both giant countries US and China may affect under developed countries. In fact, both countries should look towards eradication of poverty, pollution, terrorism and boost educational and employment opportunities across the world rather than down-sizing each other on tarrifF issues.

What is WHO doing nowadays? The failed organization is not even appearing to take a chance to conciliate between these two. What will be the implication of US China trade war in World Economy?

Free trade benefits consumers through increased choice and reduced prices, but because the global economy brings with it uncertainty, many governments impose tariffs and other trade barriers to protect the industry. There is a delicate balance between the pursuit of efficiencies and the government’s need to ensure low unemployment. If the US and the Chinese Governments react off and on in this fashion, it creates chaos in international trade. Such reactions are always instinctive and there should be well-thought off responses against each other, in imposing trade-tariffs.

This trade war is going to change multipolar world into unipolar again. Trade war between two powerful countries will result in collapse of world economy and hence they have to come to an understanding through amicable solution. They have to realize that Trade is nothing but an interdependent activity on the development of a State or Country.

Clearly the US has bigger, destructive cards to play. A rising China became friends with villains and foes of the moral. It is reaping the reward now, bolstering terrorist states and getting slapped around by the bully. China is bound to be ultimate loser. US has very little to lose.

Trump faces re-elections, Xi does not. Poorer Chinese citizens can put with a bit more pain whilst well-fed Americans can’t bear a pinprick. Chinese are behaving too big than they actually are. Trump is doing the right thing by imposing tariffs on the imports to the States

At the time, when the world is shrinking into smaller unit and being called as “global village”  because of its magnanimous development on the fronts of communication and transports. And many countries started venturing their firms of production houses, in establishing them outside their own countries also, because of multiple positive aspects. Now the matter related to any big decision against any one country may not  be restricted or stopped  to give effect to that specified country alone, but on the contrary it’s effect will be effecting on many other countries also, which are directly or indirectly connected to one another. It is good time to contemplate in that aspect also, which may save the people of smaller countries from getting adversely affected.

A WTO based global Trade Balance Regime is needed over bilateral approaches. USA, India, EU, ASEAN, LATAM, Japan etc need to meet and negotiate an International Trade Balance Regime. Such a regime should provide for currency manipulation, illegitimate subsidy regimes, provide for trade surplus bonds with importer central bank, value addition e.g. assembly / manufacture in consumer country, use of trade surplus for exports from importing country etc and help establish a sustainable economy for all sovereigns and the world economy.


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