For most of human history, there was a superpower in the world, and it was not America, it was China. Now, the Chinese are once again dying for global supremacy and it is increasingly looking as if they will actually succeed in beating the American economy.
Say what you would say about President Trump, it is undisputed that he is trying to push back against this, and yet his trade war has a devastating effect on many industries around the world, especially back home in the US Is falling 18 years ago, the World Trade Organization allowed China to become a member, following some significant changes in tonnage economies and the Chinese economy. Ironically, it was the US that advocated China entering the market. The Chinese economy was one of the fastest-growing on Earth and America wanted a piece of the pie. America invested billions in the blossoming Chinese economy, doubling its dollar in just 5 years. By gaining access to international capital and global markets, China flourished. Factories sprouted those rapidly produced goods destined for export worldwide, including the Americas. However, some Americans were worried.
You see, while Chinese companies had the advantage of cheap labor and materials, their biggest advantage was the loose enforcement of China's intellectual property rights. The situation became almost comical. An inventor launched a smartphone case with a built-in selfie stick on Kickstarter, which was fully patented and trademarked, but just 7 days later he found it priced at a fraction of the Chinese market before his own campaign Even being funded was being sold. In total, counterfeit Chinese goods were costing the US economy $ 600 billion every year and 87% of all fecks were coming from China.
There comes Donald Trump, who campaigned on a promise to take a tough stance on China. In 2017, he launched a formal inquiry into China's policies, which certainly gave rise to anger and resentment in China. Xi Jinping had threatened sanctions against the OUS, which was probably not the smartest way to respond to a president like Trump. One of Trump's first actions was to pull the US out of the Trans-Pacific Partnership, a comprehensive trade agreement with Asian countries that would reduce tariffs and help free trade. Along with that aspect of President Obama's legacy, Trump began taking more hostile steps.
An American-imposed tariff first came in March 2018, with $ 3 billion worth of Chinese goods such as electronic components, clothing, and scientific equipment. China changed very quickly with its own new tariffs on American goods such as soybeans, gold, and cotton. This is where the trade war has stopped and since then, President Trump and President Xi have each been threatening and then introducing new tariffs every few months. Sometimes it seems that the two sides can come to an agreement, allegedly very productive negotiations are taking place between the two sides, but so far it was all for nothing.
The trade war seems to be here, so who is winning it? The only number President Trump cares about is that the trade deficit is exporting more than the US is importing from China. Unfortunately, the deficit is not really getting smaller.
It is no longer growing at the same pace at which it was used, but it was a big win. And yet, the cost of maintaining a trade war in America is already being realized. The thing about the tariff is that at the end of the day, it is the consumers who usually pay for them because of the increase in price. And this is actually happening.
When you look at inflation in non-tariff goods, and inflation in products that are facing tariffs, you will see a very stark deviation. Another major source of losses was falling direct investment. Compared to Americans, who are still pouring as much money into China as ever, the Chinese money tap has been well-off, with much of the money flowing into Europe and the rest of Asia. So we certainly cannot say that American consumers are winning, at least not in the short term. However, there is a somewhat surprising winner in all of this, and that is Vietnam. Ever since the first wave of tariffs has been announced, the Vietnamese trade deficit with the US has been growing faster and faster. It seems that a lot of Chinese businesses are realizing that they can outsource production in Vietnam and call it business as usual. Vietnam is gaining so much, that Trump is already considering imposing tariffs on them. In the end, it seems as if no tariff is safe from the watchful eyes of the man.
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