what is trade war

What is Trade War?


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It is very simple to understand what trade war is. The trade war is nothing but a situation in which countries tries to damage other countries’ sells by applying tariffs on them.

This is what Trade War is in Layman Language

In simple language, it is just a tax on imports to save their domestic business from import of other countries.

Why the US forced Tariff on China goods?

The USA found that their spending on import much higher. So they decided to cut it down and there is a deficit between the USA and China import-export of goods. China retaliates this by forcing tariffs on American goods imported in China.

What’s happening?

President Donald Trump’s forced tariffs on Chinese imports has shown its effects on companies, they are trying to move production base out of China – but not to the United States.

After Donald Trump’s decisions of 10% tariff on 300 Billion USD just after a month, many companies have had a thought on moving their base out of china.

Who is facing the loss?

The Chinese companies have faced big loss as they have to face an increased tariff on Chinese product from 10 to 25%.

US companies in China have also the same problems but other countries in Asia offering them lucrative offers to attract them to shift base in their countries.

What is the result?

Around 200 companies are moving out of China due to Trump’s tariffs on 300B$ goods. President Trump twitted that trade war is good and easy to win.

Where are they moving to?

Companies are trying to find a base in South Asia. Not only international companies are moving but Chinese companies are also facing problems due to a trade war.

How could it affect you as a consumer?

If you are a consumer in china then you will have to spend higher money on American goods so you will buy the same cheap product manufactured in China. But in that case, you have to compromise between the quality of the product.

Also Read: Raghuram Rajan’s Dosa Economics

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