US President Donald Trump had a tweet on March 2 this year. He said in this tweet that America can easily win a trade war.
President Trump started the trade war against China, which has overtaken China’s scope. America’s associate countries are also burning in its fire. Indeed, India has also got its grip.
Donald J. Trump
When a country (USA) is losing many billions of dollars on trade with virtually every country it is business with, trade wars are good, and easy to win. Example, when we are down $ 100 billion with a specific country and they get cute, do not trade anymore-we win big. It’s easy!
4:20 pm – 2 March 2018
50.9 thousand people are talking about this
Despite this, this war is being seen mainly between China and USA. America’s business war against China has reached in the fifth month.
Now it is being discussed that who is enjoying this war and who is suffering from pain. In this war of China and the United States, the economists around the world agree that the US is concerned about the business relationship between the two countries.
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In such a case, if Trump thinks that victory in this business war will be from the US, then no one should doubt it.
Michael Pettis, professor of finance at the Guangku School of Management at Peking University in the interview for the Financial Times, says that the trade war is the only country which has lost the business of profit.
Here America is in a mess, so Trump is talking about winning.
The reliance of China’s economy is decreasing on the United States, but still much depends on the extent that the US economy is dependent on China, China is much more dependent on the United States. According to an estimate on China’s economy, the three percent of its GDP is dependent on the US.
This basic rule of economics is that the balance between imports and exports differs from national savings and investment balance. On the other hand, the import duty on steel will come down, but the savings-investment balance can not be corrected. The second kind of imports will increase and there will be no change in the total balance of trade.
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In Shanghai, Standard Chartered economist Wei Lee has told the Financial Times that in this trade war, 3.2 percent of China’s GDP of 1.3 percent of GDP is at stake.
Later he said that it is possible in the situation when the US will completely ban Chinese import. At the same time, he estimated the US loss in this war from 0.9 percent to 0.2 percent of his GDP.
The issue is not of estimates only. Now China has started to feel the pain of trade war from the United States. Many analysts say the effect of this war is also seen in China’s domestic market. Demand in the domestic market has declined and its direct impact is on its economy.
Although China’s exports have increased by 13 percent in May this year, as it was only 8 percent last year. It is difficult to say how long the rate of 13 percent will be maintained.
Spread eagle Chinese currency
Chinese currency has come down to the lowest level in the last six months compared to the currency of the currency currency of the U.S. currency. On the other side, in June, the Chinese stock market Shanghai Composite has dropped 10% and during this time the Chinese currency Renminbi declined by 3.3%.
The US has announced to impose $ 34 billion on Chinese products on July 6. The effect of this import duty of the USA is going to be strong on the telecom equipments.
According to the Wall Street Journal report, due to the new regulations of the US Commerce Ministry, the company of Chinese telecom maker ZTE has almost gone. The US says China steals their technology and now they will not let it happen.
According to the Wall Street Journal, data released on Monday showed that China’s exports to the US dropped by 5.4 percent. The Trump Administration says that last year, China had a profit of $ 375 billion in trade between the two countries.
China’s economy can fall further in the coming times.
The whole world is grip
The issue is not only of China and USA, but Trump’s stance is similar to those of Europe. Trump has warned of imposing 20 percent tax on Europe’s auto industry, and in response, Europe has announced an increase in import duty on several US goods.
The Nikkei Asian Review says that the trade war will not stop the process of action and reaction. Companies around the world are struggling with uncertain trade policy. On Friday, shares of many Singaporean companies fell sharply.
In the Philippines stock market PSEI, there has been a decline of 18% compared to February. Trump has not only imposed heavy duty on import of steel and aluminum from China, but the rectangle of washing machines and solar panels has almost been closed from China.