Is There Really A Potential For A Trade War Between The USA And China?

The world is getting set for what could potentially be dubbed ‘’The War of the Century” as the US and China are about to embark on a trade war. This does not augur well with the rest of the world who stands as the proverbial “grass” when “two elephants” are fighting

China has struck back in its trade dispute with the Trump administration, imposing tariffs on $50bn of US goods. Xi Jinping’s government is targeting 106 US products, including aircraft, cars, and soybeans after Washington imposed its own tariffs on Chinese goods. The measures startled the Dow Jones Industrial Average, which slumped more than 510 points at the start of trading before ending the day in positive territory. Soybeans futures fell more than 2%.

“China has taken out big guns to answer Trump’s tariff, the trade war is here,” Naseem Aslam, a chief market analyst at Think Markets said. “Farmers over in the US are going to be very nervous as China is planning to put tariffs on soft commodities such as soybean. The commodity has taken a nose dive after the announcement.”

Donald Trump has accused Beijing of violating intellectual property agreements after it pressured foreign companies to hand over crucial technology before they get access to the Chinese market.

Earlier this week, Beijing hiked tariffs on US pork and other products after President Trump approved import duties on steel and aluminum. Mr Trump has vowed to narrow the $375bn trade imbalance with Beijing.

“We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the US,” the President tweeted. “Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!”

China’s foreign ministry spokesman Geng Shuang said Beijing had hoped talks would resolve the issues and blamed the US for the trade dispute. “The best opportunities for resolving the issues through dialogue and negotiations have been repeatedly missed by the US side,”Mr.Shuang said. The US could end up the loser from a trade war, according to Mr.Aslam.

“The US Aircraft industry has also become a target of the Chinese reciprocal tariffs and traders have started to position themselves in the US pre-market, we are seeing more short interest when it comes to companies like Boeing, it is down by 3.4%,” he said before trading began in the US.

Boeing’s stock opened more than 3% lower but recovered to end the session down just 1%.

This multi-faceted battle approach adopted by the Trump led administration may yet snowball into another Global Economic Meltdown that would be reminiscent of the 2008 downturn in fortunes that marked the twilight of the Bush administration; that is really a part no one will like to thread as regards global trade currently.




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