The US-China Trade War & Where it will Lead the World’s Economy

For the better protection of intellectual properties of the US companies, Washington has demanded Beijing change its economic policies by changing its laws. For the past two years, the US administration has sought to pressure China to make sweeping changes to its policies on intellectual property protection, forced transfers of technology with China. Following increasing frustration by foreign businesses about their ability to compete fairly with Chinese companies, the U.S. and China became embroiled in trade tension.

 

The United States and China each imposing punitive tariffs of 25 per cent on US$34 billion worth of the other’s imports. Neither Washington nor Beijing has shown any intention of backing down; both appear prepared for a tit-for-tat fight. The negotiations between the two countries are still going on and little detail about progress on the talks has been made public.

 

Goldman Sachs Group Inc is raising concerns of a US recession as the trade war with China intensifies, boosting the impact on economic growth. The American economy has so far been relatively resilient as the two sides battle. But several recent signs suggest that the tit-for-tat is beginning to broadly hit American businesses. China, for its part, has set tariffs on US$185 billion worth of US goods, and is threatening both tariffs and qualitative measures that would affect US businesses operating in China. China’s own Ministry of Commerce warned that the dispute may even lead to “the largest trade war in economic history to date”.

Globally, the trade fight has roiled investment markets and dampened world economic outlook. Economists are of the opinion that the trade conflict is not yet full blown but still it is rippling through the global economy.

 

Other countries are hit indirectly through weaker demand for their own exports, either through supply chains or in response to weaker global economic growth. Initial rounds of tariffs from both sides and threats to escalate portended a possible full-blown US-China trade war as negotiations failed to move expeditiously toward a mutually acceptable deal.

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