Tuesday, May 8, 2018

The trade war between China and the United States

So finally it had to happen, when push comes to shove, the United States already promising to slap tariffs on Chinese goods imported to the U.S. finally followed through with it and slapped tariffs. And China not ready to lose face to its own citizens retaliated in kind although with much less products. But since China exports more to the U.S. than the other way around, China will lose more but this trade war is not going to be good for either side as the U.S. is highly dependent on Chinese goods and their buying of the U.S. bonds and China needs to be careful not to antagonize the U.S. too much as it is their largest export market. Already the trade war is not even started in essence and the stock market is acting like we are in a full blown war. It has been on a losing streak a little bit here and a lot more there.
It is just an unnecessary thing and it would do that much to correct the trade balance between China and the U.S. Unless the U.S. consumes less of Chinese goods and China exports less, there will always going to be trade imbalance. But here is the classic economic dilemma that it all relates to supply and demand, there is a demand for Chinese products and thus China exports its surplus items to the U.S. where there is a demand. I believe that this back and forth trade war will continue for some time and things will settle down once the new normal starts to kick in.

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