Introduction- In the multipolar
world there remains a struggle to stay strong and powerful. The world is no
longer dominated by two powerful nations US, and USSR. Today the power struggle
remains between multiple countries like US and China are also locking horns against
one another. In December 2018, China detained Canadian citizen, and
international community hinted that the decision was taken due to US- China
trade war, which was supposed to be on halt up to January 2019.
The
reason for the Conflict
America
and China are two among the powerful countries in the world. Both of them have
massive economic, political and military capacities that allow them to project
power and influence around the world. The US has been the leading world
power on the other hand China is nowhere considered less powerful nation
either. China embarked on three decades of unprecedented economic growth and
modernization as well.
America
imposed
Aluminum and Steel tariffs in early March, 2018 in order to protect its
own industries. Some other tariffs imposed by the U.S were in the field
of aerospace, information and communication technology, and machinery.
After
all tariffs imposed by the USA, China placed import duty on a wide
range of US product. including scrap aluminum ,wine and apples.
The
US again imposed tariffs on about 1,300 Chinese products .
Later
China came out with more tariffs this time taking aim at Boeing planes. America
was entertaining the idea of another 100$ billion in tariffs. In between both
the countries thought to put the trade dispute on halt.
The
Pause
at the G20 meeting in Buenos Aires, In November 2018
The U.S. and Chinese
Presidents, Donald Trump and Xi Jinping, agreed to a 90-day truce.
The two countries will try to find an amicable solution to the various problems
plaguing bilateral trade relations, such as disputes over intellectual property
rights and Chinese state support for domestic industries, through talks over
the next three months. Meanwhile, the U.S. will refrain from raising the tariff
on Chinese goods worth $200 billion from the current rate of 10% to 25% on
January 1, 2019, as planned. In return, according to the White House, China
will purchase agricultural and other goods from the U.S. in order to reduce the
trade imbalance between the two countries. If talks fail, however, increased
tariff rates are scheduled to come into force immediately.
Tensions
started again
However,
the spat
goes back to the detention on December 1 of a top Chinese telecom executive in
Vancouver, who has since been released on bail, in response to a U.S. request.
America
wanted custody of Meng Wanzhou, the chief financial officer of Huawei and the
daughter of the company’s founder. Her arrest was
part of the U.S. Justice Department’s ongoing criminal probe into the company’s
sale of telecommunications equipment to Iran, a potential breach of
sanctions against Tehran.
But
the arrest is also seen in the context of the caution in much of the West
against Huawei’s potentially winning bids as 5G communication networks are
adopted, on grounds of a security threat. The military background of the Huawei
founder has only raised speculation about the firm’s connection to the Chinese
defence and intelligence services. U.S.
has invoked a rare national security provision under domestic law to impose
punitive tariffs on global steel and aluminium imports. A similar investigation
is under way specifically to determine the risk to domestic security from
alleged Chinese intellectual property abuses. In addition, Beijing’s “Made
in China 2025” industrial policy has aroused deep suspicion in the U.S.
about the persistence of state subsidies to prop up indigenous firms. It is
therefore speculated that Washington has its lens trained on Huawei, which has
emerged as the world’s largest telecommunications equipment maker, surpassing
Sweden’s Ericsson.
What
is a trade war?
A
situation in which countries try to damages each other's trade typically by the
imposition of tariffs or quota restrictions. Going through history- one of the
most famous examples of US protectionism came during the great
depression after world war 1. Domestic US businesses faced increased
international competition, as well as declining prices due to overproduction.
When the stock market crashed in 1929, domestic businesses largely
supported the protectionist measure and in 1930, President Hoover
signed the Smoot Hawley tariff act.
Impacts
of the Conflict
Trade
war had never been productive for nations in human history. The world is
already at stake where constant crisis of Iraq, Syria, Afghanistan and another
region of African nations keeps on shaking the economic growth. Open borders
have helped in poverty alleviation since globalization.
Uncertainty
Both
countries should come to one platform and negotiate. Imposing tariffs by both
the countries can create economic chaos worldwide.
It
would impact every nation as world bank has warned that the
effect of the increased use of tariffs to regulate international trade could be
similar to the significant drop in global trade after the financial crisis.
The
ongoing trade war remains a lose-lose situation for the warring parties. The
only winner will be special interest groups and consumer in countries that do
not engage in the tit - for- tat tariff war,but their winning will come at the
cost of global growth.
This
is right decision to pause the conflict, yet there is factor of uncertainty. It
is high time countries worldwide come together to promote the cause of free
trade.
