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US-China Trade War Intensified


The trade war between the two countries is intensifying as the United States decides to slap additional tariffs on about half of the products it imports from China.


The United States is pushing China all the way through by imposing tariffs on Chinese imports worth $ 200 billion. China has warned the United States for imposing tariffs, and that it has no choice but to retaliate. The conflict between the two countries has intensified, and the holding of the scheduled minister talks has become unclear. In addition, trade war between the two countries is expected to affect the global economy.


Currently, the United States imposes high tariffs on Chinese products totaling $ 250 billion. This is about half of China’s total imports in 2017, from total of $ 505.5 billion in imports of Chinese products. The amount of retaliation tariffs China imposes on US products is also about 110 billion dollars, which accounts for 70% of total US imports worth $ 153.9 billion.


The US and China, as well as the global economy, are fluctuating due to the widespread expansion of the US-China trade war. According to Reuters, economists predict global trade will fall by 0.5 percent and world economic growth by 0.1 percentage points to every $ 100 billion imports affected by customs duties. Morgan Stanley, an investment banker, diagnosed that global trade could be seriously disturbed by the US-China conflict, given that two-thirds of the commodities traded are linked to the global value chain. In addition, Reuters expects banks to be cautious about financing related industries because of uncertainties in trade, and therefore companies will hesitate to invest. If tariffs are passed on to consumers, domestic demand and consumer sentiment will shrink and financial market volatility will increase.


The emerging economies, which are increasingly sensitive to external factors, are facing a catastrophic disaster that prolongs the trade war to bring down the global economy. Emerging economies, such as Turkey, Argentina, South Africa, Indonesia and Brazil, are already suffering from debt burdens as foreign currencies have already fallen due to the stronger dollar and their currencies are depreciating. It is worried that trade wars will become more intense and the US Federal Reserve (Fed) will raise the benchmark interest rate twice more this year as expected. The Fed will open the Federal Open Market Committee (FOMC) from 25 to 26 this month to raise the existing interest rate by 0.25 percentage points (p) to 2.00 to 2.25 percent.

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